Akebia Therapeutics, Inc. v. Azar, No. 20-1161

CourtU.S. Court of Appeals — First Circuit
Writing for the CourtSELYA, Circuit Judge.
Parties AKEBIA THERAPEUTICS, INC., Plaintiff, Appellant, v. Alex Michael AZAR, II, in his official capacity as Secretary of Health and Human Services, et al., Defendants, Appellees.
Docket NumberNo. 20-1161
Decision Date30 September 2020

976 F.3d 86

AKEBIA THERAPEUTICS, INC., Plaintiff, Appellant,
v.
Alex Michael AZAR, II, in his official capacity as Secretary of Health and Human Services, et al., Defendants, Appellees.

No. 20-1161

United States Court of Appeals, First Circuit.

September 30, 2020


Seth P. Waxman, with whom Bruce S. Manheim, Brian M. Boynton, Leon T. Kenworthy, Washington, DC, Lindsey B. Silver, Boston, MA, Wilmer Cutler Pickering Hale and Dorr LLP, and Nicole R. Hadas, were on brief, for appellant.

Jennifer B. Dickey, Deputy Associate Attorney General, Civil Division, U.S. Department of Justice, with whom Joseph H. Hunt, Assistant Attorney General, Andrew E. Lelling, United States Attorney, Abby C. Wright and Sarah E. Weiner, Attorneys, Appellate Staff, Robert P. Charrow, General Counsel, U.S. Department of Health and Human Services, Brenna E. Jenny, Deputy General Counsel, Janice L. Hoffman, Associate General Counsel, and Susan Maxson Lyons, Deputy Associate General Counsel for Litigation, were on brief, for appellees.

Before Howard, Chief Judge, Selya and Thompson, Circuit Judges.

SELYA, Circuit Judge.

In the modern world, the financial fortunes of a new prescription drug are often determined by how that drug is treated for reimbursement purposes by third parties. This appeal illustrates the point: in the underlying case, plaintiff-appellant Akebia Pharmaceuticals, Inc. (Akebia), sued a quartet of related federal defendants — the Secretary of the Department of Health and Human Services (HHS), the Administrator of the Centers for Medicare & Medicaid Services, and the entities that they lead1 — complaining that CMS acted arbitrarily,

976 F.3d 89

capriciously, and contrary to law with respect to the reimbursement protocol for Akebia's new drug, Auryxia, when prescribed for treatment of iron deficiency anemia (IDA) in patients with chronic kidney disease (CKD). Akebia moved for a preliminary injunction, but the district court denied the motion. See Akebia Therapeutics, Inc. v. Azar, 443 F. Supp. 3d 219, 222 (D. Mass. 2020). After careful consideration, we affirm.

I. BACKGROUND

The federal Medicare statute provides health-care coverage for certain segments of the United States population, particularly individuals sixty-five years of age or older and individuals with certain disabilities (regardless of age). See 42 U.S.C. § 1395c. Medicare is divided into several parts, each corresponding to a different dimension of the health-care landscape. This case revolves around Medicare Part D, which addresses prescription drug coverage for Medicare beneficiaries. See id. §§ 1395w-101 to -104.

As opposed to other types of Medicare coverage, through which the federal government pays health-care providers directly in a typical fee-for-service arrangement, Medicare Part D involves a contractual relationship with private insurance companies known as "sponsors." See id. § 1395w-112. Medicare beneficiaries select their preferred sponsor and benefits package and pay a monthly premium to the chosen sponsor. In turn, the sponsor receives reimbursement from the Medicare program for the cost of covered drugs.

As a default, Part D requires sponsors to provide Medicare beneficiaries access to all covered Part D drugs, subject to various exclusions. See id. § 1395w-111(e)(2)(A); see also id. § 1395w-102(a)(1)(A); id. § 1395w-102(b). A covered Part D drug is a drug dispensed by means of a prescription that the federal Food and Drug Administration (FDA) has approved as safe and effective. See id. § 1395w-102(e)(1)(A). In enacting Part D, Congress specified several categories of drugs that CMS may exclude from coverage. See id. § 1395w-102(e)(2) (cross-referencing id. § 1396r-8(d)(2)).

The battleground in this case is a category of excluded drugs encompassing "[p]rescription vitamins and mineral products, except prenatal vitamins and fluoride preparations." Id. § 1396r-8(d)(2)(E). At the center of the dispute is the scope of this category, specifically, whether or not Auryxia, when prescribed for treatment of IDA in patients with CKD, constitutes a "mineral product" that CMS may properly exclude from coverage. Though this dispute is essentially legal in nature, it lends perspective both to sketch the factual underpinnings of Akebia's challenge and to rehearse the travel of the case.

In September of 2014, the FDA approved Auryxia for the treatment of hyperphosphatemia (elevated phosphate levels in the blood), a condition commonly associated with CKD, for patients who are receiving dialysis. Over three years later (in November of 2017), the FDA approved Auryxia for a second use: the treatment of IDA in patients with CKD who are not on dialysis. Akebia, which now owns Auryxia,2 describes the drug as a ferric citrate coordination complex that differs from traditional iron supplements in that it facilitates iron transport to the blood rather than

976 F.3d 90

simply replacing missing iron. This distinction is salient, Akebia insists, because Auryxia can be used to treat patients who have sufficient iron stores but have difficulty transporting the iron to the blood in order to create red blood cells. Seen in this light, Auryxia offers an alternative to intravenous or oral iron supplements in situations in which such traditional iron supplements are ineffective for patients who have sufficient iron in their bodies but suffer from inadequate iron transportation to the blood.

Although Auryxia initially was covered under Part D for both of its permitted uses, CMS e-mailed sponsors in September of 2018, informing them that CMS had decided to exclude Auryxia from coverage when used to treat IDA in patients with CKD who are not on dialysis. CMS's e-mail stated that "[c]onsistent with other iron products, ferric citrate was removed" from the list of drugs covered under Part D. Following this guidance, Medicare sponsors thereafter refused to cover Auryxia when prescribed to treat IDA.

Inheriting the existing state of Medicare coverage in December of 2018, see supra note 2, Akebia made repeated efforts to extract information from CMS about the coverage determination and to persuade CMS to revisit it. These efforts included outreach to CMS, in-person meetings with CMS officials, and a formal legal memorandum submitted to both HHS's General Counsel and CMS's Chief Legal Officer. Akebia's campaign proved unavailing: on October 4, 2019, CMS affirmed its coverage determination, making clear that it would not revisit its position.

Within a matter of weeks, Akebia repaired to the federal district court. Its complaint alleged that CMS, in denying full Part D coverage of Auryxia, violated the relevant portions of the Medicare statute by improperly classifying Auryxia as a mineral product and excluding it from coverage. The complaint prayed that the district court set aside CMS's coverage determination as unlawful under the Administrative Procedure Act (APA), see 5 U.S.C. § 706(2)(A), and restore full coverage for Auryxia. Shortly thereafter, Akebia moved for a preliminary injunction, seeking to press "pause" on the coverage determination until CMS's interpretation could be fully litigated. Among other things, Akebia claimed that it was likely to succeed on the merits of its suit because CMS's interpretation of the Medicare statute was antithetic to the statutory text; because CMS had acted arbitrarily and capriciously by covering Auryxia for treatment of hyperphosphatemia but excluding it for treatment of IDA; and because CMS had compounded its arbitrary and capricious actions by reaching a coverage determination at odds with past CMS decisions. Following a hearing, the district court reserved decision and subsequently issued a thoughtful rescript in which it concluded that Akebia had failed to show a likelihood of success on the merits of its claims. See Akebia, 443 F. Supp. 3d at 222. After making findings with respect to the other elements of the preliminary injunction calculus, see id. at 230-231, it denied Akebia's motion for preliminary injunctive relief, see id. at 231. This interlocutory appeal ensued. See 28 U.S.C. § 1292(a).

II. ANALYSIS

Our analysis proceeds in three segments. As an hors d'oeuvre, we start with CMS's contention that this matter is not justiciable. Next, we proceed to the appetizer and limn the standard of review associated with preliminary injunctions. Finally, we turn to the main course: Akebia's asseveration that the district court abused

976 F.3d 91

its discretion in refusing to grant a preliminary injunction.

A. Justiciability.

In this venue, as in the court below, CMS argues that the dispute between the parties is not fit for judicial review. This argument rests on two pillars. First, CMS says that Akebia did not properly channel its grievances through the agency's internal appeals processes. See 42 U.S.C. § 1395ii (incorporating id. § 405(h)). Second, CMS says that its coverage determination e-mail does not constitute final agency action and, thus, is not ripe for judicial review under the APA. See 5 U.S.C. § 704.

With respect to the first of these claims, CMS posits that Akebia has flouted the internal appeals process by attempting an end...

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26 practice notes
  • United States v. Simon, 20-1368
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 25, 2021
    ...33 (1st Cir.), cert. denied, 140 S.Ct. 388 (2019). This standard of review is not one-dimensional. See Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 92 (1st Cir. 2020); United States v. Lewis, 517 F.3d 20, 24 (1st Cir. 2008). Within it, we review for clear error the district court's factu......
  • United States v. Simon, s. 20-1368
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 25, 2021
    ...U.S. ––––, 140 S. Ct. 388, 205 L.Ed.2d 232 (2019). This standard of review is not one-dimensional. See Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 92 (1st Cir. 2020) ; United States v. Lewis, 517 F.3d 20, 24 (1st Cir. 2008). Within it, we review for clear error the district court's fact......
  • Akebia Therapeutics, Inc. v. Becerra, Civil Action No. 19-cv-12132-ADB
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 9, 2021
    ...4, 2019, CMS affirmed its coverage determination, making clear that it would not revisit its position. Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 89–90 (1st Cir. 2020) (citations omitted). To the extent the parties dispute relevant facts, the Court, as it must when deciding a motion to......
  • Akebia Therapeutics, Inc. v. Becerra, Civil Action No. 19-cv-12132-ADB
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 9, 2021
    ...4, 2019, CMS affirmed its coverage determination, making clear that it would not revisit its position.Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 89-90 (1st Cir. 2020) (citations omitted). To the extent the parties dispute relevant facts, the Court, as it must when deciding a motion to ......
  • Request a trial to view additional results
27 cases
  • United States v. Simon, 20-1368
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 25, 2021
    ...33 (1st Cir.), cert. denied, 140 S.Ct. 388 (2019). This standard of review is not one-dimensional. See Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 92 (1st Cir. 2020); United States v. Lewis, 517 F.3d 20, 24 (1st Cir. 2008). Within it, we review for clear error the district court's factu......
  • United States v. Simon, s. 20-1368
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 25, 2021
    ...U.S. ––––, 140 S. Ct. 388, 205 L.Ed.2d 232 (2019). This standard of review is not one-dimensional. See Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 92 (1st Cir. 2020) ; United States v. Lewis, 517 F.3d 20, 24 (1st Cir. 2008). Within it, we review for clear error the district court's fact......
  • Akebia Therapeutics, Inc. v. Becerra, Civil Action No. 19-cv-12132-ADB
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 9, 2021
    ...4, 2019, CMS affirmed its coverage determination, making clear that it would not revisit its position. Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 89–90 (1st Cir. 2020) (citations omitted). To the extent the parties dispute relevant facts, the Court, as it must when deciding a motion to......
  • Akebia Therapeutics, Inc. v. Becerra, Civil Action No. 19-cv-12132-ADB
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • July 9, 2021
    ...4, 2019, CMS affirmed its coverage determination, making clear that it would not revisit its position.Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 89-90 (1st Cir. 2020) (citations omitted). To the extent the parties dispute relevant facts, the Court, as it must when deciding a motion to ......
  • Request a trial to view additional results

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