Sarepta Therapeutics, Inc., App./cross-res. V. Wa State Health Care Authority, Res./cross-app.
497 P.3d 454
| Wash. Ct. App. | 2021Background
- Duchenne muscular dystrophy (DMD) is a progressive, primarily pediatric, muscle-wasting genetic disorder; EXONDYS 51 (Exondys) treats a specific mutation present in ~13% of DMD patients.
- The FDA granted Exondys accelerated approval in 2016 based on limited evidence of dystrophin production; clinical benefit remained uncertain.
- Washington Health Care Authority (HCA) administers Medicaid and uses an evidence-based prior‑authorization framework with a hierarchy of evidence (A–D) and medical‑necessity rules to control costs and assure quality.
- In 2019 HCA initially denied prior authorization for Exondys for three Medicaid patients (rating the drug D, later amended to C) because patients showed insufficient clinical responsiveness; after peer‑to‑peer reviews HCA’s medical officer approved those three requests.
- Sarepta (manufacturer) sued under the Administrative Procedure Act (APA), challenging HCA’s hierarchy and medical‑necessity rules; the superior court denied HCA’s motion to dismiss for lack of standing and also denied Sarepta’s petition on the merits.
- The Court of Appeals reversed: it held Sarepta lacked standing because the Washington statutes and the federal Medicaid Drug Rebate Program (MDRP) do not place a drug manufacturer’s financial interests within the zone of interests the HCA must protect; the court dismissed Sarepta’s appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sarepta has standing under the APA to seek judicial review of HCA rules (zone of interests/injury) | Sarepta: having an MDRP rebate agreement, it has a concrete interest in reimbursement/coverage and is thus aggrieved by HCA rules | HCA: Sarepta’s financial interests are not among those the agency is required to consider; any injury is speculative and outside the zone of interests | Held: Sarepta lacks standing — it fails the zone‑of‑interests test and does not show a redressable injury |
| Whether the federal Medicaid Drug Rebate Program (MDRP) places manufacturers’ reimbursement interests within the zone of interests | Sarepta: MDRP’s requirement that states cover drugs of rebate‑agreement manufacturers guarantees a protected interest in payment/coverage | HCA: MDRP ensures eligibility for coverage but does not guarantee payment; Congress intended cost control and beneficiary access, not protection of manufacturer profits | Held: MDRP does not confer a protected interest supporting standing; coverage eligibility ≠ guaranteed payment |
Key Cases Cited
- Pharmaceutical Research & Mfrs. of America v. Walsh, 538 U.S. 644 (discusses federal Medicaid rebate program and state prior authorization authority)
- Allan v. University of Washington, 140 Wn.2d 323 (sets standing requirements under Washington law for APA review)
- St. Joseph Hosp. & Health Care Ctr. v. Dep't of Health, 125 Wn.2d 733 (explains zone‑of‑interests test for administrative review)
- Patterson v. Segale, 171 Wn. App. 251 (describes injury‑in‑fact test and standing burden under APA)
- Center for Biological Diversity v. Dep’t of Fish & Wildlife, 14 Wn. App. 2d 945 (reviews standing as a question of law and standard of review)