United States District Court, District of Columbia
L. FRIEDRICH, UNITED STATES DISTRICT JUDGE
Biopharmaceuticals, Inc. (Ipsen) brings this suit under the
Administrative Procedure Act to challenge the Centers for
Medicare & Medicaid Services' (CMS) interpretation of
the Social Security Act-as expressed in a letter sent to
Ipsen-as arbitrary, capricious, and contrary to law. Before
the Court are the parties' cross-motions for summary
judgment. Because the letter at issue does not qualify as
final agency action, the Court will grant CMS's motion
for summary judgment, deny Ipsen's motion for summary
judgment, and dismiss the complaint.
markets various drug products in the United States. A.R. 1.
In 2007, the Food & Drug Administration (FDA) approved
Ipsen's new drug application (NDA) for a product called
Somatuline Depot Injection that is used to treat
acromegaly. Id. at 1, 35-39. In 2014, after
Ipsen had submitted additional user studies and proposed
changes in supplemental new drug applications (sNDAs), FDA
approved two supplemental applications: one that
"propose[d] changes to the drug substance and drug
product manufacturing processes, and to the drug product
container closure system" and another that
"provide[d] for a new indication" to use the drug
to treat a rare type of cancer. See Id. at 40, 76.
Ipsen calls the products approved through the sNDA process
Somatuline ED. Id. at 1.
parties dispute whether Somatuline ED is a new drug for
purposes of the Medicaid Drug Rebate Program (MDRP). The
Social Security Act requires drug manufacturers to
participate in the MDRP as a condition of Medicaid payment
for covered outpatient drugs. See 42 U.S.C. §
1396r-8. As part of that program, manufacturers provide
rebates to the states for sales of prescription drugs covered
by Medicaid. Id. § l396r-8(a)(1). The amount of
those rebates is calculated using a statutorily set formula,
id. § 1396r-8(c), and that formula uses a
drug's "base date average manufacturer price"
(AMP)-that is, a number reflecting the average
manufacturer's price for the first full quarter after a
drug enters the market-as part of the calculation. If
Somatuline ED is a new drug, Ipsen can calculate and report a
new base date AMP for it. If not, Ipsen must continue to use
the AMP for the "old" version of Somatuline Depot
Injection. See Def.'s Opp'n & Cross-Mot.
at 1-6, Dkt. 16-1 (describing the process).
January 7, 2015, Ipsen sent a letter to CMS-the federal
agency tasked with administering the Medicaid
program-expressing its view that "the Somatuline ED
products should be considered 'new products' entitled
to baseline AMPs separate and distinct from those of the
correlating Somatuline Injection products." A.R. 1. The
letter explained in detail why Ipsen believed Somatuline ED
was entitled to its own AMP and informed CMS that "Ipsen
intend[ed] to proceed with this approach absent CMS
instruction to the contrary." Id. at 4. On July
2, 2015, CMS replied to Ipsen via email. CMS's email
stated that CMS "appreciate[d]" the nature of the
changes Ipsen made and "the time, effort and financial
support" involved, but concluded that Ipsen's
changes "d[id] not meet the criteria for the
establishment of new base date AMPs for the three strengths
of Somatuline ED." Id. at 6. CMS provided a
brief analysis and concluded that "the baseline data for
these three NDCs [for Somatuline ED] must be changed to
reflect the original baseline data of Somatuline Depot."
Id. On July 30, Ipsen emailed CMS and stated that it
would seek review of the decision and "would continue to
use its newly established base date AMP pending further
review by HHS." Id. at 11.
September 21, Ipsen (through counsel) sent another letter to
CMS, this time requesting that CMS's Office of General
Counsel review the initial determination, requesting a
meeting to discuss the issue, and again arguing that its
Somatuline ED products were entitled to new base date AMPs.
Id. at 9-21. Ipsen's letter concluded that CMS
"should reconsider its decision reflected in the July 2,
2015 email and should approve Ipsen's request to
establish new base date AMPs for its Somatuline ED
product." Id. at 21. On August 3, the Director
of the Division of Pharmacy sent a two-page letter
reiterating CMS's position and stating that CMS
"maintain[ed]" that the factors Ipsen relied upon
"d[id] not warrant establishment of new base date AMPs
for the three strengths of Somatuline ED." Id.
at 34. The letter stated that it was not "a final agency
action or even an initial determination on a reimbursement
filed a complaint on December 5, 2016, and now
"request[s] that the Court declare that Somatuline ED is
a new and different drug product from its predecessor for
purposes of the MDRP and set aside CMS's contrary
determination." Pl's Mot. at 12, Dkt. 13. The
parties have since filed cross-motions for summary judgment.
Dkts. 13, 16.
grants summary judgment if the moving party "shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986). When a plaintiff
seeks review of an agency decision under the Administrative
Procedure Act (APA), summary judgment "serves as the
mechanism for deciding, as a matter of law, whether the
agency action is supported by the administrative record and
otherwise consistent with the APA standard of review."
Sierra Club v. Mainella, 459 F.Supp.2d 76, 90
(D.D.C. 2006). "[T]he entire case ... is a question of
law" and the district court "sits as an appellate
tribunal." Am. Biosci., Inc. v. Thompson, 269
F.3d 1077, 1083 (D.C. Cir. 2001) (internal quotation marks
and footnote omitted).
Administrative Procedure Act provides that "final agency
action for which there is no other adequate remedy in a court
[is] subject to judicial review." 5 U.S.C. § 704.
To be "final" under this provision, the action must
satisfy two conditions: "First, the action must mark the
consummation of the agency's decisionmaking process-it
must not be of a merely tentative or interlocutory nature.
And second, the action must be one by which rights or
obligations have been determined, or from which legal
consequences will flow." U.S. Army Corps of
Eng'rs v. Hawkes Co., 136 S.Ct. 1807, 1813 (2016)
(quoting Bennett v. Spear, 520 U.S. 154, 177-78
(1997)). Here, both parties "agree that CMS's
interpretation . . . was the consummation of its
decisionmaking process," as "CMS is not still
considering how to respond to Ipsen's letters."
Defi's Reply at 2-3, Dkt. 20. The issue is thus whether
CMS's August 3, 2016 letter is an action by which rights
or obligations have been determined, or from which legal
consequences will flow.
law in this area is hardly crisp." Rhea Lana, Inc.
v. Dep't of Labor, 824 F.3d 1023, 1027 (D.C. Cir.
2016). That is at least in part because of the
"'pragmatic' and 'flexible' nature of
the inquiry as a whole." Id. (quoting
Nat'l Ass 'n of Home Builders v. U.S. Army Corps
of Eng'rs, 417 F.3d 1272, 1279 (D.C. Cir.
2005)). As a result, there is language in Supreme Court and
D.C. Circuit opinions that seemingly pulls in both
directions. The Supreme Court, for example, recently
characterized its 1956 decision in Frozen Food in
terms that would seem to cut in favor of finding
Although the order "had no authority except to give
notice of how the [Interstate Commerce] Commission
interpreted" the relevant statute, and "would have
effect only if and when a particular action was brought
against a particular carrier," we held that the order
was nonetheless immediately reviewable. The order, we
explained, "warns every carrier, who does not have
authority from the Commission to transport those ...