976 F.3d 86
1st Cir.2020Background:
- Akebia (which acquired Auryxia) sued HHS/CMS after CMS informed Medicare Part D sponsors (Sept. 2018) that Auryxia would be excluded from Part D when prescribed for iron deficiency anemia (IDA) in non-dialysis chronic kidney disease (CKD) patients.
- Auryxia was FDA‑approved for two uses: hyperphosphatemia in dialysis patients (earlier) and IDA in non‑dialysis CKD patients (2017); CMS continues to cover it for the former use but excluded it for the latter.
- Akebia filed suit under the APA seeking to set aside CMS’s coverage determination and moved for a preliminary injunction to restore Part D coverage pending review; the district court denied the injunction.
- Core statutory text: Medicare Part D excludes “prescription vitamins and mineral products” (42 U.S.C. § 1396r‑8(d)(2)(E)); dispute focuses on whether Auryxia (a ferric citrate coordination complex) is a “mineral product” and whether CMS may exclude particular medical uses.
- CMS argued lack of justiciability (failure to exhaust/agency action not final); the courts avoided resolving those jurisdictional issues and instead evaluated likelihood of success on the merits.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Justiciability: exhaustion & final agency action | Akebia: manufacturers cannot use Medicare Appeals Council; CMS email is final and causes legal effects, so reviewable | CMS: Akebia failed to exhaust, and the sponsor‑directed email is nonfinal guidance | Court: Declined to decide jurisdictional threshold; proceeded to merits inquiry |
| Construction of “mineral products” | Akebia: “mineral” means naturally occurring, inorganic substances; Auryxia is synthetic/organic so excluded from the exclusion | CMS: phrase “mineral products” includes manufactured/processed products containing minerals | Court: “Mineral products” reasonably includes manufactured products; “products” not superfluous, so CMS’s reading is permissible |
| Use‑based exclusions (can CMS exclude a drug only for particular medical uses?) | Akebia: exclusion must be all‑or‑nothing; statute doesn’t authorize use‑based exclusions for minerals | CMS: statute authorizes exclusion of drugs or their medical uses; CMS may exclude a drug for particular uses | Court: Plain text authorizes excluding drugs or their medical uses; CMS may apply a use‑based exclusion |
| Arbitrary and capricious / inconsistency with prior decisions | Akebia: excluding Auryxia for IDA but covering other uses and other drugs is arbitrary/inconsistent | CMS: its decision follows a use‑based approach consistent with prior iron product decisions; Auryxia treats iron deficiency in practice | Held: District court’s factual finding that Auryxia treats IDA and CMS’s use‑based approach were not clearly erroneous; no arbitrary/capricious error shown |
Key Cases Cited
- Shalala v. Illinois Council on Long Term Care, 529 U.S. 1 (2000) (agency‑process/channeling of Medicare disputes to administrative remedies)
- Bennett v. Spear, 520 U.S. 154 (1997) (tests for final agency action under the APA)
- Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998) (Article III jurisdiction requirement for adjudication)
- Ross‑Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12 (1st Cir. 1996) (standard for reviewing preliminary injunction denials)
- New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1 (1st Cir. 2002) (likelihood of success is the sine qua non of preliminary injunction analysis)
- Gustafson v. Alloyd Co., 513 U.S. 561 (1995) (avoid interpretations that render statutory language superfluous)
- Shaw's Supermarkets, Inc. v. NLRB, 884 F.2d 34 (1st Cir. 1989) (agency must adequately explain departures from prior precedent)