UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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COUNCIL ON RADIONUCLIDES AND )
RADIOPHARMACEUTICALS, INC., )
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Plaintiff, )
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v. ) Civil Action No. 18-633 (RBW)
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ALEX M. AZAR II, in his official )
Capacity as Secretary of the United States )
Department of Health and Human )
Services, and )
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UNITED STATES DEPARTMENT OF )
HEALTH AND HUMAN SERVICES, )
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Defendants. )
____________________________________)
MEMORANDUM OPINION
The plaintiff, the Council on Radionuclides and Radiopharmaceuticals, Inc. (the
“Council”), brings this civil action pursuant to the Administrative Procedure Act (“APA”), 5
U.S.C. §§ 701–706 (2018), against the defendants, the United States Department of Health and
Human Services (the “Department”) and Alex Azar, in his official capacity as the Secretary of
the Department (the “Secretary”), challenging the defendants’ interpretation of certain provisions
of the Social Security Act, 42 U.S.C. §§ 1396–1396w-5 (2018). See generally Complaint
(“Compl.”). Currently pending before the Court are the Plaintiff’s Motion for Summary
Judgment (“Pl.’s Mot.”) and the Defendants’ Cross-Motion for Summary Judgment and
Opposition to Plaintiff’s Motion for Summary Judgment (“Defs.’ Mot.”). Upon careful
consideration of the parties’ submissions, 1 the Court concludes for the following reasons that it
must deny the plaintiff’s motion for summary judgment and grant the defendants’ cross-motion
for summary judgment.
I. BACKGROUND
Established in 1965 under Title XIX of the Social Security Act, the Medicaid program
provides states with funding to provide medical assistance to individuals “whose income and
resources are insufficient to meet the costs of necessary medical services.” 42 U.S.C. § 1396-1.
“In order to participate in the Medicaid program, a [s]tate must have a plan for medical
assistance approved by the Secretary.” Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S.
644, 650 (2003) (citing 42 U.S.C. § 1396a(b)). A state’s plan must, among other things,
“define[] the categories of individuals eligible for benefits and the specific kinds of medical
services that are covered” by the plan. Id. (citing 42 U.S.C. § 1396a(a)(10), (17)). And, a state
may choose to provide, as part of its plan, payment under the Medicaid program for “covered
outpatient drugs,” see 42 U.S.C. § 1396a(a)(54), which are defined to include drugs that (1)
“may be dispensed only upon prescription,” 42 U.S.C. § 1396r-8(k)(2)(A); (2) are “approved for
safety and effectiveness as a prescription drug,” id. § 1396r-8(k)(2)(A)(i); and (3) are not
“provided as part of, or as incident to and in the same setting as” certain specified services “and
for which payment may be made . . . as part of payment for th[ose] [services] and not as direct
reimbursement for the drug” (the “limiting definition”), id. § 1396r-8(k)(3).
1
In addition to the filings already identified, the Court considered the following submissions in rendering its
decision: (1) the Defendants’ Answer (“Defs.’ Answer”); (2) the Memorandum of Points and Authorities in Support
of Plaintiff’s Motion for Summary Judgment (“Pl.’s Mem.”); (3) the Memorandum in Support of Defendants’ Cross-
Motion for Summary Judgment and in Opposition to Plaintiff’s Motion for Summary Judgment (“Defs.’ Mem.”); (4)
the Plaintiff’s Reply in Support of Motion for Summary Judgment and Opposition to Defendants’ Cross-Motion for
Summary Judgment (“Pl.’s Opp’n”); and (5) the Defendants’ Reply to Plaintiff’s Opposition to Defendants’ Cross-
Motion for Summary Judgment (“Defs.’ Reply”).
2
In 1990, Congress created the Medicaid drug rebate program (the “Medicaid Drug Rebate
Program”) to offset Medicaid costs incurred by the federal government and the states for
outpatient drugs provided to Medicaid recipients. See Walsh, 538 U.S. at 652. Pursuant to the
Medicaid Drug Rebate Program, a drug manufacturer, in order to receive state Medicaid
payments for its covered outpatient drugs, must enter into a rebate agreement with the Secretary.
See Pharm. Research & Mfrs. of Am. v. Thompson, 251 F.3d 219, 221 (D.C. Cir. 2001). The
rebate agreement requires drug manufacturers to pay the state “a portion of the price of [its]
drugs” for which payment is covered by a state under the Medicaid program. Id.; see 42 U.S.C.
§ 1396r-8(a), (b). The Medicaid Drug Rebate Program also requires that drug manufacturers, on
a quarterly basis, submit, inter alia, drug pricing information, see id. § 1396r-8(b)(3)(A), and
noncompliance with these reporting obligations subjects the drug manufacturer to monetary
penalties, see id. § 1396r-8(b)(3)(C).
On February 1, 2016, the Centers for Medicare & Medicaid Services (the “CMS”), the
division of the Department that administers the Medicaid program on behalf of the Secretary,
issued a final rule revising the requirements “pertaining to [the] Medicaid reimbursement for
covered outpatient drugs . . . [and] also revis[ing] other requirements related to [covered
outpatient drugs], including key aspects of [their] Medicaid coverage and payment, and the
[Medicaid] [D]rug [R]ebate [P]rogram” (the “Final Rule”). Joint Appendix (“JA”) at 2. In its
final rule, the CMS noted, in response to comments, that radiopharmaceuticals 2 “meet the
definition of a [covered outpatient drug],” if they are approved by the United States Food and
Drug Administration (the “FDA”) as a “prescription drug,” so long as the limiting provision does
2
According to the Council, “[r]adiopharmaceuticals are used primarily as part of a variety of diagnostic imaging,
and in some cases, therapeutic procedures,” Compl. ¶ 30, and “are either themselves radioactive and/or used to
produce radioactive ‘patient ready’ doses,” id. ¶ 29.
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not apply to the drug, id. at 7. CMS further stated that “radiopharmaceuticals[, including those
used in compounding patient-ready doses,] qualify as a [covered outpatient drug] because of the
approval process undergone with [the] FDA . . . [and] [t]herefore, radiopharmaceuticals are to be
reported to the [Medicaid Drug Rebate] [P]rogram in the same manner as other [covered
outpatient drugs] for the purposes of the administration of the [Medicaid Drug Rebate]
[P]rogram.” Id.
On March 19, 2018, the Council filed its complaint in this case, challenging the CMS’s
interpretation of the definition of “covered outpatient drugs” to include radiopharmaceuticals.
See Compl. at 1. Thereafter, the parties filed their cross-motions for summary judgment, which
are the subjects of this Memorandum Opinion.
II. STANDARD OF REVIEW
A moving party is entitled to summary judgment “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). When ruling on a Rule 56(a) motion, the Court must view the
evidence in the light most favorable to the non-moving party. See Holcomb v. Powell, 433 F.3d
889, 895 (D.C. Cir. 2006) (citing Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150
(2000)). The Court must therefore draw “all justifiable inferences” in the non-moving party’s
favor and accept the non-moving party’s evidence as true. Anderson v. Liberty Lobby Inc., 477
U.S. 242, 255 (1986). At the summary judgment stage, “[b]are allegations are insufficient,”
Sierra Club v. EPA, 292 F.3d 895, 898 (D.C. Cir. 2002). In responding to a motion for summary
judgment, the non-moving party “must do more than simply show that there is some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). Accordingly, the non-moving party must not rely on “mere
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allegations or denials . . . but . . . must set forth specific facts showing that there [are] [ ] genuine
issue[s] for trial.” Anderson, 477 U.S. at 248 (second omission in original) (citation and internal
quotation marks omitted). Thus, “[t]he mere existence of a scintilla of evidence in support of the
[non-moving party’s] position [is] insufficient” to withstand a motion for summary judgment, as
“there must be [some] evidence on which the jury could reasonably find for the [non-movant].”
Id. at 252.
III. ANALYSIS
The Court’s analysis starts and ends “with the question of subject matter jurisdiction.”
Am. Freedom Law Ctr. v. Obama, 106 F. Supp. 3d 104, 108 (D.D.C. 2015) (Walton, J.) (quoting
Aamer v. Obama, 742 F.3d 1023, 1028 (D.C. Cir. 2014)); see also NO Gas Pipeline v. FERC,
756 F.3d 764, 767 (D.C. Cir. 2014) (“It is fundamental to federal jurisprudence that Article III
courts such as ours are courts of limited jurisdiction.”). “Article III of the Constitution limits the
jurisdiction of federal courts to ‘Cases’ and ‘Controversies.’” Susan B. Anthony List v.
Driehaus, 573 U.S. 149, 157 (2014) (citing U.S. Const. art. III, § 2). “In an attempt to give
meaning to Article III’s case-or-controversy requirement, the courts have developed a series of
principles termed ‘justiciability doctrines,’ among which are standing[,] ripeness, mootness, and
the political question doctrine.” Nat’l Treasury Emps. Union v. United States, 101 F.3d 1423,
1427 (D.C. Cir. 1996) (quoting Allen v. Wright, 468 U.S. 737, 750 (1984)). If a plaintiff lacks
Article III standing, a district court
need not delve into [a plaintiff’s] myriad constitutional and statutory claims . . .
because a court may not resolve contested questions of law when its jurisdiction is
in doubt, as [h]ypothetical jurisdiction produces nothing more than a hypothetical
judgment—which comes to the same thing as an advisory opinion, disapproved
by [the Supreme] Court from the beginning.
Am. Freedom Law Ctr., 106 F. Supp. 3d at 108 (first, third, and fourth alterations in original)
5
(first quoting Crow Creek Sioux Tribe v. Brownlee, 331 F.3d 912, 915 (D.C. Cir. 2003); then
quoting Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998)).
[T]he irreducible constitutional minimum of standing contains three elements.
First, the plaintiff must have suffered an “injury in fact”—an invasion of a legally
protected interest which is (a) concrete and particularized, and (b) “actual or
imminent, not ‘conjectural’ or ‘hypothetical.’” Second, there must be a causal
connection between the injury and the conduct complained of—the injury has to
be “fairly . . . trace[able] to the challenged action of the defendant, and not . . .
th[e] result [of] the independent action of some third party not before the court.”
Third, it must be “likely,” as opposed to merely “speculative,” that the injury will
be “redressed by a favorable decision.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (second, third, fourth, and fifth
alterations in original) (citations omitted). “An allegation of future injury may suffice if the
threatened injury is certainly impending, or there is a substantial risk that the harm will occur.”
Susan B. Anthony List, 573 U.S. at 158 (internal quotation marks omitted).
An association seeking to establish standing to sue on behalf of its members must further
show that
(1) at least one of its members would have standing to sue in his own right, (2) the
interests the association seeks to protect are germane to its purpose, and (3)
neither the claim asserted nor the relief requested requires that an individual
member of the association participate in the lawsuit.
Chamber of Commerce v. EPA, 642 F.3d 192, 199 (D.C. Cir. 2011) (quoting Sierra Club, 292
F.3d at 898). And, “it is not enough to aver that unidentified members have been injured,” id.
(citation omitted); instead, an association must provide “individual affidavits” from “members
who have suffered the requisite harm,” Summers v. Earth Island Inst., 555 U.S. 488, 499 (2009);
see also Sierra Club, 292 F.3d at 899 (stating that the plaintiff “must set forth by affidavit or
other evidence specific facts” to show it has standing).
The plaintiff, “[t]he party [that is] invoking federal jurisdiction[,] bears the burden of
establishing standing,” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 411–12 (2013) (internal
6
quotations marks omitted), and “each element must be supported in the same way as any other
matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of
evidence required at the successive stages of the litigation,” Susan B. Anthony List, 573 U.S. at
158 (internal quotations marks omitted). Therefore, “a plaintiff moving for summary judgment
in [a] district court[] [ ] must support each element of its claim to standing ‘by affidavit or other
evidence.’” Sierra Club, 292 F.3d at 899 (quoting Lujan, 504 U.S. at 561).
The defendants argue that the Council “does not have standing because it has failed to
establish that a single one of its members has suffered, or is likely to suffer, an injury traceable to
[the] [d]efendants,” and that they are therefore entitled to summary judgment. Defs.’ Mem. at 2,
10. 3 The Council argues in response that the Final Rule not only “exposes [its] members to
injuries that flow from the inability to report product and pricing data—the risk of civil penalties
and enforcement, and the risks to product coverage,” Pl.’s Opp’n at 6, but also “imposes, or
would impose, significant costs upon [its] members, both member companies that already
participate in the Medicaid [Drug] Rebate Program [(the ‘participating members’)] and member
companies that do not participate in the Medicaid [Drug] Rebate Program currently [(the
‘nonparticipating members’)],” id. at 5. According to the Council, the Final Rule requires “[the
participating] members [to] incur administrative costs associated with ongoing reporting of
product data and processing rebate claims, as well as liability for the rebate amounts
3
The defendants also argue that the “CMS’s interpretation of the Medicaid Drug Rebate [Program] is reasonable
and its explanation of that interpretation is neither arbitrary nor capricious.” Defs.’ Mem. at 2; see also Defs.’ Mem.
at 14–27. However, because the Court concludes that the Council lacks standing, the Court is precluded from
determining the merits of these arguments. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 95 (1998)
(“The requirement that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the
judicial power of the United States’ and is ‘inflexible and without exception.’” (alteration in original) (quoting
Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884)); see also NO Gas Pipeline, 756 F.3d at 767 (“It is
fundamental to federal jurisprudence that Article III courts such as ours are courts of limited jurisdiction. Therefore,
‘we must examine our authority to hear a case before we can determine the merits.’” (quoting Wyo. Outdoor
Council v. U.S. Forest Serv., 165 F.3d 43, 47 (D.C. Cir. 1999))).
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themselves,” and “[the] nonparticipating members to participate in a government program that
does not apply to them, at a significant price,” id., including the costs associated with “hiring
additional personnel; installing new information technology systems capable of evaluating,
synthesizing, and collecting product information for reporting purposes; and training personnel
in the requirements of the Medicaid [Drug] Rebate Program,” id. at 6. However, the arguments
advanced by the Council in its opposition to the defendants’ summary judgment motion do not
suffice to establish its standing because they are not supported by evidence, see Deloatch v.
Harris Teeter, Inc., 797 F. Supp. 2d 48, 57 (D.D.C. 2011) (stating that “[t]he ‘mere arguments of
counsel . . . are not evidence’ that may be used to defeat a motion for summary judgment.”
(quoting Barnette v. Ridge, No. Civ.A. 02-1897(RMC), 2004 WL 3257071, at *6 n.6 (D.D.C.
Nov. 15, 2004)), and the Council has failed to submit evidence or identify any evidence already
in the record establishing that at least one of its members has been harmed, or is likely to be
harmed, as a result of the adoption of the Final Rule. 4
The evidence submitted by the Council in support of its position that it has standing are
declarations from two of its members, Curium US LLC (“Curium”), see Pl.’s Opp’n, Exhibit
(“Ex.”) A (Declaration of Dan Brague, CEO, Curium US LLC (“Curium Decl.”)) ¶ 4, and
Advance Accelerator Applications, see id., Ex. B (Declaration of Roger Estafanos of AAA
(“AAA Decl.”)) ¶ 4. However, contrary to the Council’s assertion that these declarations
“illustrat[e] that [its] members will suffer economic injury,” Pl.’s Opp’n at 5, they are
4
The Court notes that it reviewed two letters that were submitted by the parties in the Joint Appendix: one letter to
the CMS from Mallinckrodt Pharmaceuticals and another letter to the CMS from GE Healthcare. See JA 29–32,
38–41. However, because neither Mallinckrodt Pharmaceuticals nor GE Healthcare indicated in their letters
whether they were members of the Council, the Court did not take these letters into consideration when determining
whether the Council had established that one of its members had standing to sue in its own right.
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insufficient to confer standing upon the Council because neither declaration establishes that
either member has been harmed or will be harmed by the Final Rule.
With respect to the declaration submitted by Dan Brague, the Chief Executive Office of
Curium, this declaration fails to show that Curium will suffer economic injury, as the Council
claims. Brague claims that Curium, if it were to enter into a Medicaid Drug Rebate Program
Agreement, “would have to expend significant resources to implement new programs and install
new systems to administer the [Medicaid Drug Rebate] Program.” Pl.’s Opp’n, Ex. A (Curium
Decl.) ¶ 10. However, Brague concedes that “Curium . . . does not currently participate in the
Medicaid Drug Rebate Program and has not entered into a Medicaid Drug Rebate Program
Agreement,” id., Ex. A (Curium Decl.) ¶ 8, and he does not assert that Curium intends to
participate in the Medicaid Drug Rebate Program in the future, see generally id., Ex. A (Curium
Decl.). And, because participation in the Medicaid Drug Rebate Program is not mandatory for
drug manufacturers, but rather is only required in order to receive state Medicaid payments for
its covered outpatient drugs, see Thompson, 251 F.3d at 221; see also 42 U.S.C. § 1396r-8(a),
(b), Brague’s declaration fails to establish that Curium will even likely be required to comply
with the requirements of the Medicaid Drug Rebate Program, cf. Humane Soc. v. Babbitt, 46
F.3d 93, 97 (D.C. Cir. 1995) (finding that the plaintiff could not establish that it had standing
because its supporting declaration lacked allegations demonstrating that the injury was
imminent). Thus, Curium’s alleged harm asserted in Brague’s declaration is not imminent, but
purely speculative, and therefore, is not sufficient to establish that Curium has standing to sue in
its own right.
The declaration submitted by Roger Estafanos, the Head of Pricing and Market Access at
Advance Accelerator Applications, also fails to establish that Advance Accelerator Applications
9
has standing to sue in its right. Estafanos represents that Advance Accelerator Applications
“currently participates in the Medicaid Drug Rebate Program and has entered into a Medicaid
Drug Rebate Program Agreement,” Pl.’s Opp’n, Ex. B (AAA Decl.) ¶ 8, and that because the
CMS “provides little to no guidance on how radiopharmaceutical manufacturers are to comply
with the[] [Medicaid Drug Rebate Program’s] reporting requirements,” id., Ex. B (AAA Decl.) ¶
10., “manufacturers [must] make good-faith, reasonable assumptions about how to satisfy the
reporting requirements,” id., Ex. B (AAA Decl.) ¶ 15 (claiming that “the general lack of specific
reporting standards relating to radiopharmaceuticals, and [the] CMS’s refusal to clarify how
radiopharmaceutical manufacturers are to comply with these requirements necessitates that
manufacturers make good-faith, reasonable assumptions about how to satisfy the reporting
requirements”). However, this general statement that Advance Accelerator Applications must
make assumptions about how to satisfy its reporting obligations is insufficient to establish that
Advance Accelerator Applications has suffered a concrete harm, without any allegation
establishing either that its assumptions have resulted in its noncompliance with the regulations or
that there is a substantial risk that it will be found noncompliant with the regulations. Cf. State
Nat. Bank v. Lew, 795 F.3d 48, 53 (D.C. Cir. 2015) (finding that the plaintiff had standing to
challenge regulations because it “indeed alleged [in its affidavit] that it must now monitor its
remittances to stay within the safe harbor[] and [that] the monitoring program causes it to incur
costs”). In addition, contrary to the Council’s assertions that “[the participating] members [will]
incur administrative costs associated with ongoing reporting of product data and processing
rebate claims, as well as liability for the rebate amounts themselves,” Pl.’s Opp’n at 5, and that
the Final Rule “exposes [its] members to injuries that flow from the inability to report product
and pricing data—the risk of civil penalties and enforcement, and the risks to product coverage,”
10
id. at 6, Estafanos does not claim that Advance Accelerator Applications has incurred or will
incur any additional costs, see generally id., Ex. B (AAA Decl.). Thus, because Estafanos’s
declaration does not allege sufficient facts to support that Advance Accelerator Applications has
suffered or will suffer an injury as a result of participating in the Medicaid Drug Rebate
Program, the Court finds that Advance Accelerator Applications has failed to establish its
standing to sue in its own right as well.
Therefore, because neither declaration submitted by the Council establishes that at least
one of its members has standing, the Court concludes that the Council has failed to carry its
burden of showing that it has standing to sue as an association on behalf of its members. Thus,
the Court finds that summary judgment in favor of the defendants is required.
IV. CONCLUSION
For the foregoing reasons, the Court concludes that the Council has failed to establish
that one of its members has standing to sue in its own right. Accordingly, the Court will grant
the defendants’ summary judgment motion and deny the plaintiff’s motion for summary
judgment.
SO ORDERED this 13th day of November, 2019. 5
REGGIE B. WALTON
United States District Judge
5
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.
11