Canada, PhRMA and Others Challenge U.S. Prescription Drug Rules

As we previously reported, in July 2019 the U.S. Department of Health and Human Services (HHS) announced a Safe Importation Action Plan (Action Plan) created with the FDA to allow the importation of certain prescription drugs originally intended for foreign markets, and particularly Canada.  In the fall, the Trump administration announced implementation of the Action Plan (the “Final Rule”, see 85 Fed. Reg. 62,094 (Oct. 1, 2020)).  In response, on November 27, days before the Final Rule was to go into effect, Canadian Health Minister Patty Hadju signed an order to limit bulk exports of prescription drugs if they would create a shortage at home.  Hadju stated that “[c]ompanies will now also be required to provide information to assess existing or potential shortages, when requested, and within 24 hours if there is a serious or imminent health risk.”

In addition, on November 23, Pharmaceutical Research and Manufacturers of America (PhRMA), the Partnership for Safe Medicines (PSM), and the Council for Affordable Health Coverage (CAHC) (Plaintiffs), filed a complaint for declaratory and injunctive relief against HHS and the FDA.  In the Complaint, Plaintiffs allege that the Final Rule disregards key protections of the Federal Food, Drug, and Cosmetic Act (FDCA) designed to ensure patient safety.  Section 804 of the FDCA authorizes HHS to allow the importation of drugs by pharmacists and wholesalers for commercial distribution and by individual patients.  Section 804 is effective, however, only if the HHS Secretary certifies to Congress “that the implementation of this section will—(A) pose no additional risk to the public’s health and safety; and (B) result in a significant reduction in the cost of covered products to the American consumer”.  See Section 804 of the FDCA, 21 U.S.C. § 384(l)(1).  Plaintiffs allege that the HHS Secretary Alex Azar made no conclusory statements as to safety and cost savings of the Final Rule, and therefore Azar’s certification contradicts Section 804.  Plaintiffs seek that the Court hold unlawful, set aside and permanently enjoin implementation of the certification and Final Rule.

In addition, on December 4, PhRMA, the Association of Community Cancer Centers, the Global Colon Cancer Association and National Infusion Center Association filed a complaint against the U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services and the Center for Medicare and Medicaid Innovation, asserting that the new prescription drug market regulation, known as the Most Favored Nation Rule (MFN Rule), exceeds the statutory authority provided to the Centers for Medicare and Medicaid Services, raises serious constitutional questions and improperly fails to follow required rulemaking procedures.  The MFN Rule links reimbursement for the top 50 physician-administered medicines to the lowest price available in 22 foreign countries in the Organization for Economic Co-operation and Development (OECD).  The Plaintiffs allege that a problem with this approach is that the foreign countries either impose government price setting, have single-payer health care systems, or otherwise make value judgments about quality of life unrelated to the US healthcare system.  PhRMA also states that government price setting is “detrimental to patient access to innovative medicines”.  Plaintiffs seek a preliminary and permanent injunction against the enforcement of the MFN Rule, including a temporary restraining order,  a declaration that the MFN Rule is unconstitutional and invalid, and other appropriate relief.