Strike Three. Southern District of New York Joins Other Federal Courts In Blocking Trump Administration’s Most Favored Nation Drug Pricing Rule on Procedural Grounds

January 7, 2021By Michael S. Heesters & Faraz Siddiqui & Serra J. Schlanger

On December 30, 2020, District Court Judge Kenneth M. Karas of the Southern District of New York issued a nationwide preliminary injunction preventing the Most Favored Nation (MFN) rule from applying to Regeneron’s drug EYLEA (aflibercept).  This is the third federal court ruling preventing implementation of the MFN rule.

Our previous post summarizing the MFN rule can be found here; our summary of the District of Maryland’s temporary restraining order and the Northern District of California’s preliminary injunction can be found here.  The two earlier decisions applied to all of the products currently listed in the MFN as well as any others that would have been added under the rule.

In holding that a nationwide preliminary injunction is appropriate, the court analyzed Regeneron’s likelihood of success, likelihood of irreparable injury, the balance of hardships and the public interest.  The court specifically held that Regeneron would be financially and reputationally harmed if the MFN rule took effect because the company would lose business to other competitors’ drugs.  Moreover, similar to the prior federal courts’ opinions, Judge Karas held that Regeneron was likely to succeed on the merits because the government failed to comply with, and did not have good cause to ignore, the Administrative Procedure Act’s notice and comment requirement.  Finally, the public interest and balance of hardships favored Regeneron.  Specifically, implementation of the MFN rule may require Regeneron to cut its research and development budget, which could limit access to medication in the future.  The court also noted that failure to follow the notice and comment rules dilutes the public interest because it prevents proposed rules from being “tested via exposure to diverse public comment.”

After a temporary restraining order and two preliminary injunctions, it is highly unlikely that the MFN rule will survive as an interim final rule.  Therefore, the burden of whether, and how, to proceed with the MFN rule will fall to the new Biden administration and their appointees.

Judge Karas’ full opinion can be found here.