Sarepta Therapeutics, Inc., App./cross-res. V. Wa State Health Care Authority, Res./cross-app.

497 P.3d 454
CourtCourt of Appeals of Washington
DecidedOctober 26, 2021
Docket54870-4
StatusPublished
Cited by4 cases

This text of 497 P.3d 454 (Sarepta Therapeutics, Inc., App./cross-res. V. Wa State Health Care Authority, Res./cross-app.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sarepta Therapeutics, Inc., App./cross-res. V. Wa State Health Care Authority, Res./cross-app., 497 P.3d 454 (Wash. Ct. App. 2021).

Opinion

Filed Washington State Court of Appeals Division Two

October 26, 2021

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II SAREPTA THERAPEUTICS, INC., No. 54870-4-II

Appellant/Cross-Respondent

v.

STATE OF WASHINGTON, HEALTH PUBLISHED OPINION CARE AUTHORITY, and MARYANNE LINDEBALD, in her official capacity as Director of Washington State Health Care Authority,

Respondent/Cross-Appellant.

LEE, C.J. — Sarepta Therapeutics, Inc., appeals the superior court’s order denying its

petition for judicial review under the Washington Administrative Procedure Act (APA), chapter

34.05 RCW, wherein Sarepta challenged the Washington Health Care Authority’s (HCA)

application of its prior authorization rules to Sarepta’s drug, EXONDYS 51 (Exondys). The HCA

cross-appeals the superior court’s order denying its motion to dismiss Sarepta’s petition for lack

of standing. We hold that Sarepta lacks standing to file its petition for judicial review. Therefore,

the superior court erred by denying the HCA’s motion to dismiss. Accordingly, we reverse the

superior court’s order denying Sarepta’s motion to dismiss for lack of standing and dismiss

Sarepta’s appeal. No. 54870-4-II

FACTS

A. BACKGROUND—APPROVAL OF EXONDYS

Duchenne Muscular Dystrophy (DMD) is a “genetic disorder characterized by the

progressive loss of skeletal muscle and degeneration.” Clerk’s Papers (CP) at 131. DMD

primarily affects young boys. “The primary symptoms of [DMD] are caused by a lack of

dystrophin in the muscle. Children with [DMD] lose the ability to walk independently and most

become reliant on wheelchairs for mobility by the age of 13.” CP at 131.

On September 19, 2016, the Food and Drug Administration (FDA) approved Sarepta’s new

drug application for Exondys pursuant to its accelerated approval regulations. Exondys is a drug

that treats patients with specific mutations of DMD. “The provision of EXONDYS 51 has been

shown to result in the production of truncated dystrophin, which hopes to have a positive effect on

muscle degeneration [by] slowing or halting the progression of [DMD].” CP at 131 (boldface

omitted). Only 13 percent of all DMD patients have the specific mutation which Exondys treats.

B. MEDICAID DRUG REBATE PROGRAM AND HCA’S PRIOR AUTHORIZATION REQUIREMENT

“Congress created the Medicaid program in 1965 by adding Title XIX to the Social

Security Act.” Pharmaceutical Research & Mfrs. of America v. Walsh, 538 U.S. 644, 650, 123 S.

Ct. 1855, 155 L. Ed. 2d 889 (2003). However, before 1990, Medicaid did not specifically address

outpatient prescription drug coverage. Id. at 651. Instead, the Secretary of the Health and Human

Services would approve individual State plans regulating the coverage of outpatient prescription

drugs as part of controlling Medicaid costs. Id. These individual state plans controlled the

coverage of outpatient prescription drugs through the use of formularies excluding specific drugs

from coverage or through prior authorization requirements. Id. at 651-52.

2 No. 54870-4-II

In 1990, Congress included the Medicaid Drug Rebate Program (MDRP) in the Omnibus

Reconciliation Act of 1990. 42 U.S.C. § 1396r-8; Walsh, 538 U.S. at 652. Under the MDRP, drug

manufacturers must enter into rebate agreements in order for their drugs to be eligible for coverage

by Medicaid. 42 U.S.C. § 1396r-8(a)(1). Once a drug manufacturer enters into a rebate agreement

with either the Secretary or a state, their drugs are considered “covered outpatient drugs” and are

reimbursable under State Medicaid programs. 42 U.S.C. § 1396r-8(a)(1), (k)(2). Reimbursement

for covered outpatient drugs is subject to various limitations. 42 U.S.C. § 1396r-8(d). Congress

specifically included the use of formularies under certain circumstances and the use of prior

authorization programs. 42 U.S.C. § 1396r-8(d)(1), (4), (5).

“A State may subject to prior authorization any covered outpatient drug.” 42 U.S.C. §

1396r-8(d)(1)(A). 42 U.S.C. § 1396r-8(d)(5) provides:

A State plan under this subchapter may require, as a condition of coverage or payment for a covered outpatient drug . . . the approval of the drug before its dispensing for any medically accepted indication (as defined in subsection (k)(6)) only if the system providing for such approval— (A) provides response by telephone or other telecommunication device within 24 hours of a request for prior authorization; and (B) except with respect to the drugs on the list referred to in paragraph (2), provides for the dispensing of at least 72-hour supply of a covered outpatient prescription drug in an emergency situation (as defined by the Secretary).

The purpose of creating the MDRP was to reduce the cost of prescription drugs to the

Medicaid program and to ensure that Medicaid recipients had access to a variety of prescription

drug choices:

The Committee believes that Medicaid, the means-tested entitlement program that purchases basic health care for the poor, should have the benefit of the same discounts on single source drugs that other large public and private purchasers enjoy. The Committee bill would therefore establish a rebate mechanism in order

3 No. 54870-4-II

to give Medicaid the benefit of the best price for which a manufacturer sells a prescription drug to any public or private purchaser. Because the Committee is concerned that Medicaid beneficiaries have access to the same range of drugs that the private patients of their physicians enjoy, the Committee bill would require States that elect to offer prescription drugs to cover all of the products of any manufacturer that agrees to provide price rebates.

H.R. REP. NO. 101-881 at 96-97 (1990), reprinted in 1990 U.S.C.C.A.N. 2017, 2108-09. The

House Bill report states, “[T]he bill would not affect any authority States have under current law

to impose prior authorization controls on prescription drugs.” 1990 U.S.C.C.A.N. 2017, 2110.

The report further explained,

States that elect to offer prescription drug coverage under their Medicaid programs would be required to cover all of the drugs of any manufacturer entering into and complying with such an agreement with the Secretary. This requirement would take effect April 1, 1991. As under current law, States would have the option of imposing prior authorization requirements with respect to covered prescription drugs in order to safeguard against unnecessary utilization and assure that payments are consistent with efficiency, economy, and quality of care. However, the Committee does not intend that States establish or implement prior authorization controls that have the effect of preventing competent physicians from prescribing in accordance with their medical judgment.

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