Coalition for Common Sense in Government Procurement v. United States
2011 U.S. Dist. LEXIS 123065
D.D.C.2011Background
- NDAA-08 §703 requires TRICARE retail pharmacy prescriptions to be subject to Federal Ceiling Prices (FCPs).
- DoD promulgated a 2009 rule implementing the statute; the Court remanded to consider alternatives due to potential overreach.
- On remand, DoD issued a largely identical 2010 rule offering mechanisms for refunds from manufacturers when prices exceeded FCPs.
- The 2010 rule provides three pathways: voluntary bilateral agreements, refunds via separate agreements or debt collection, and opt-out/drug removal from TRICARE, with refunds for periods post-enactment.
- Coalition challenges DoD authority to require manufacturer refunds absent express voluntary agreement and challenges timing for refunds on transactions before the 2010 rule.
- The court grants summary judgment for DoD, holding statutory authority exists and applies to pre-rule transactions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to require refunds without voluntary agreement | Coalition: NDAA-08 requires express voluntary agreement. | DoD: statute delegates regulatory mechanism; no express voluntariness required. | DoD has authority to require refunds without explicit agreement. |
| Timeliness of refunds to pre-rule transactions | Refunds for pre-2010-rule transactions are impermissible retroactive. | NDAA-08 subjects prescriptions after 2008; timing governed by statute, not rule. | Refunds may apply to pre-2010 transactions. |
| Chevron step one applicability | Coalition argues statute directly controls whether refunds allowed without voluntary agreement. | Congress delegated authority to DoD; regulation permissible. | Statute does not directly obligate voluntary agreement; regulation permissible. |
| Chevron step two reasonableness | DoD misreads market and best practices; rule is arbitrary. | Refund mechanism fits statute, practicable, and consistent with best practices. | Regulation reasonable and supported by statutory design. |
Key Cases Cited
- Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) (agency deference at Chevron step one and two; proper if reasonable)
- Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency action reviewed for reasonableness; not arbitrary)
- Alpharma, Inc. v. Leavitt, 460 F.3d 1 (D.C. Cir. 2006) (requires rational connection between facts and agency choice)
- New York v. EPA, 443 F.3d 880 (D.C. Cir. 2006) (statutory interpretation and consistency with purposes)
- Morgan Stanley Capital Group Inc. v. Pub. Util. Dist. No. 1, 554 U.S. 527 (2008) (statutory interpretation; extent of congressional delegation)
- Good Samaritan Hosp. v. Shalala, 508 U.S. 402 (1993) (agency construction may be sustained if plausible and fits statute)
- Reed v. R.R. Bd., 145 F.3d 373 (D.C. Cir. 1998) (reasonableness inquiry under Chevron step two)
- Fin. Planning Ass'n v. SEC, 482 F.3d 481 (D.C. Cir. 2007) (standard for evaluating regulatory action under statutes)