The United States District Court for the District of Maryland issued an injunction blocking the Department of Health and Human Services (HHS) from implementing an interim final rule, reducing certain drug prices beginning January 1. 2021. The Association of Community Cancer Centers (ACCC) filed a formal complaint against the interim rule on December 4 and then moved for a preliminary injunction on December 10, 2020.

On November 27, 2020, the Centers for Medicare and Medicaid Services (CMS), a division of HHS, issued the interim final rule. The new policy was “to require reimbursements made for certain drugs covered by Medicare Part B” and mandated implementation of a new pricing model. This rule is nicknamed the ‘Most Favored Nation Rule’ because it will base the drug prices on the “lowest price in a group of ‘most favored nations’ rather than the average U.S. sales price.”

The ACC made three main arguments when filing for a preliminary injunction. First, they claim that the Most Favored Nation rule violates the Administrative Procedures Act (APA) for not providing a proper notice and comment period. Second, the rule “exceeds the authority provided to CMS by the Social Security Act.” And lastly, this “violates the Constitution’s bicameralism and presentment and separation of powers requirements.”

The ACC argued that this rule is in direct violation of the APA, which requires a 30-day comment period on the Federal Register which CMS has bypassed. Additionally, implementing this rule also sidesteps the APA's requirement of an Agency to take into account any “significant” comment to a rule and implement changes or adjustments accordingly.

For a court to grant a preliminary injunction, a case must demonstrate four things: the likelihood to succeed on the merits of the arguments, the likelihood that an entity will “suffer irreparable harm” which is “actual and imminent” and not just speculative; the balance tips in the plaintiff’s favor, and an injunction would be in the public’s interest.

District Judge Catherine C. Blake found that the ACC “demonstrated a likelihood of success on the merits of their claim under the APA” to which CMS bypassed the open comment period. The court further observed that the APA only allows for “a narrow exception” to sidestep the required public commenting period. The APA puts the burden of justifying this exception on the Agency producing the rule. The court sided with the ACC, who argued that CMS did not ultimately provide this justification.

CMS claims they found “good cause to waive both the notice and comment period” because “delaying implementation of this is contrary to the public interest.” They further stated that they will accept comments until January 26, 2021, even though the implementation period will still go ahead as planned, for January 1. The Court explained their preliminary reasoning for supporting ACC’s claim by stating, “Agencies presumably always believe their regulations will benefit the public.”

The Court also ruled that ACC has proven “an abundance of irreparable harm that is likely to occur absent an injunction.” The proposed rule is promoted as to “reduce Medicare drug expenditures by nearly $5 billion, and accordingly would drastically reduce revenues for providers, many of whom already operate on thin profit margins.” The court found that the finalized rule “ providers little over a month to prepare” for implementing this new policy which would require them “to prepare for a new pricing model, attempt to renegotiate contracts, and work with patients to transition them to alternative therapies” all before the January 1, 2021 deadline.

And lastly, the District Court ruled “that the balance of the equities and the public interest weighs strongly in favor of issuing a .” Therefore, District Judge Blake signed the temporary restraining order on December 23, 2020.

The finalized rule by CMS has “mandatory, nationwide participation” beginning January 1, 2021, and covers “the fifty drugs and biologicals that account for the highest Medicare Part B reimbursement spending.” However, 45 U.S. Code Section 1315a “allows the agency to test payment and service delivery ‘models’ to reduce programs expenditures while at the same time ‘preserving or enhancing the quality of care.” This section of the U.S. Code also outlines procedures for expanding those tests of models to either a larger jurisdiction or even a nation-wide scope before it becomes mandatory.

Amid a global pandemic, “CMS acknowledges that its rule could disrupt care, potentially forcing beneficiaries ‘to travel to seek care from an excluded provider’ or perhaps even ‘postpon or forgo treatment’ altogether.” Many of the patients who benefit from the Medicare or Medicaid programs are in a higher-risk category for complications if they contract COVID-19, making it almost impossible for them to safely travel or test new, alternative medicines.