Introduction

In the appellate case Akebia Therapeutics, Inc. v. Alex Michael Azar, II, Akebia Pharmaceuticals challenged the Centers for Medicare & Medicaid Services' (CMS) decision to exclude its drug, Auryxia, from Medicare Part D coverage when prescribed for treating iron deficiency anemia (IDA) in patients with chronic kidney disease (CKD). The crux of the dispute centers on whether Auryxia qualifies as a "mineral product" under the Medicare statute, thereby permitting its exclusion from coverage. The parties involved include Akebia Pharmaceuticals as the plaintiff-appellant and Alex Michael Azar, II, in his official capacity, along with other federal entities as defendants.

Summary of the Judgment

The United States Court of Appeals for the First Circuit affirmed the decision of the district court to deny Akebia's motion for a preliminary injunction. The court found that Akebia did not demonstrate a likelihood of success on the merits of its claims challenging CMS's interpretation of the term "mineral products." The court upheld CMS's exclusion of Auryxia for treating IDA, determining that Auryxia falls within the statutory exclusion category. Consequently, the appellate court concluded that CMS acted within its legal authority and that the district court did not abuse its discretion in its decision.

Analysis

Precedents Cited

The judgment references several key precedents that influenced the court's decision:

• Administrative Procedure Act (APA): The APA was central in evaluating whether CMS's decision was arbitrary or capricious.
• SHALALA v. ILLINOIS COUNCIL ON LONG TERM CARE, INC. (529 U.S. 1, 2000): Addressed the necessity of following internal appeals processes.
• GUSTAFSON v. ALLOYD CO. (513 U.S. 561, 1995): Emphasized interpreting statutes to avoid rendering terms superfluous.
• Davila-Bardales v. INS (27 F.3d 1, 1994): Highlighted the agency's flexibility in refining precedents without being overly rigid.
• Encino Motorcars, LLC v. Navarro (136 S. Ct. 2117, 2016): Discussed deference standards under the APA.

Legal Reasoning

The court's legal reasoning focused on statutory interpretation and administrative law principles. Key points include:

• Statutory Interpretation: The term "mineral products" was examined in the context of Medicare Part D. The court determined that "mineral products" includes both naturally occurring and man-made substances, especially given the statutory language that Congress used.
• Use-Based Exclusion: CMS's decision to exclude Auryxia was based on its specific use—treating IDA—which falls within the permissible exclusions under the Medicare statute.
• Preliminary Injunction Standard: Akebia needed to demonstrate a likelihood of success on the merits, improbably of suffering irreparable harm, and that the balance of hardships favored injunction. The court found Akebia lacked sufficient evidence for these elements.
• Deference to Agency: The court applied the "arbitrary and capricious" standard under the APA, which requires that agency decisions not be irrational or unsupported by evidence. CMS's decision met this standard.

Impact

This judgment reinforces the discretion of federal agencies like CMS in interpreting statutory language, especially concerning drug coverage under Medicare Part D. It sets a precedent that agencies can make use-based exclusions if they are consistent with the statutory framework and prior decisions. Pharmaceutical companies may find it challenging to contest CMS's coverage determinations unless they can clearly demonstrate that such decisions are arbitrary or lack a rational basis.

Conclusion

The decision in Akebia Therapeutics v. Azar underscores the judicial deference given to federal agencies in interpreting their statutory mandates. By affirming CMS's exclusion of Auryxia for treating IDA under Medicare Part D, the court highlighted the importance of adhering to statutory language and agency expertise in making coverage determinations. This case serves as a critical reference for pharmaceutical companies and legal practitioners navigating the complexities of Medicare drug coverage and administrative law.