PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES et al

Filing 29

MEMORANDUM OPINION denying 14 Defendants' motion for summary judgment and granting 21 Plaintiff's motion for summary judgment. See document for details. Signed by Judge Rudolph Contreras on 10/14/2015. (lcrc2)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PHARMACEUTICAL RESEARCH AND
MANUFACTURERS OF AMERICA,
Plaintiff,
v.
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES, et al.,
Defendants.

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Civil Action No.:

14-1685 (RC)

Re Documents No.:

14, 21

MEMORANDUM OPINION
DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT.
I. INTRODUCTION
The Court previously vacated a Final Rule promulgated by the Secretary of the
Department of Health and Human Services (“HHS”) that addressed the circumstances in which
an orphan drug must be offered at a discounted price pursuant to section 340B of the Public
Health Service Act (“PHSA”). The Court concluded that HHS lacked the statutory authority to
promulgate that rule. See Pharm. Research & Mfrs. of Am. v. U.S. Dep’t of Health & Human
Servs., 43 F. Supp. 3d 28, 42–45 (D.D.C. 2014) (hereinafter “PhRMA”). HHS has since issued
an interpretive rule (the “Interpretive Rule”) identical in substance to the vacated Final Rule that
sets forth the “manner in which section 340B(e) of the PHSA will be interpreted and
implemented by HHS.” A.R. 680. The plaintiff, Pharmaceutical Research and Manufacturers of
America (“PhRMA”) again challenges HHS’s action, contending that the Interpretive Rule
contravenes section 340B’s plain language. HHS has moved for summary judgment arguing that
the Interpretive Rule does not constitute a final agency action sufficient to state a claim and that,

in any event, its reading of the statute is at least entitled to deference under Skidmore v. Swift &
Co., 323 U.S. 134 (1944) because it “reasonably balances Congress’s concerns with maintaining
incentives for the development of drugs for orphan diseases with providing the newly covered
340B entities with discounts sufficient to make participation in the program beneficial.” Defs.’
Mem. Supp. Summ. J. at 3, ECF No. 14–1. PhRMA has cross-moved for summary judgment
and argues that the Interpretive Rule is a final agency action subject to immediate challenge and
that the rule conflicts with the statute’s plain language. Because the Court concludes that the
Interpretive Rule is a final agency action and that the Interpretive Rule contravenes the plain
language of section 340B(e), the Court will deny HHS’s motion for summary judgment and
grant PhRMA’s motion for summary judgment.

II. FACTUAL & STATUTORY BACKGROUND
This case involves the intersection of two intricate statutory schemes: the Orphan Drug
Act and the 340B Program. Both are designed, in large part, to ensure greater access to
medications for certain populations. In its prior memorandum opinion in this dispute, the Court
described the statutory schemes implicated in this case and the Court assumes familiarity with
that discussion. See PhRMA, 43 F. Supp. 3d at 31–33.
A. The Orphan Drug Act
The Orphan Drug Act involves the designation and marketing of drugs—called orphan
drugs—to treat rare diseases or conditions. 1 Orphan drugs are so-named because, absent the

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A rare disease or condition is defined by statute as:

. . . [A]ny disease or condition which (A) affects less than 200,000 persons in the
United States, or (B) affects more than 200,000 in the United States and for which
there is no reasonable expectation that the cost of developing and making
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financial and marketing incentives Congress has provided to pharmaceutical manufacturers for
the development of such drugs, efforts to invest, research, and otherwise manufacture those
drugs would likely be abandoned. Congress passed the Act after concluding that “because so
few individuals are affected by any one rare disease or condition, a pharmaceutical company
which develops an orphan drug may reasonably expect the drug to generate relatively small sales
in comparison to the cost of developing the drug and consequently to incur a financial loss.” Act
of Jan. 4, 1983, Pub. L. No. 97-414, § 1(b)(4), 96 Stat. 2049, 2040. For that reason, the Orphan
Drug Act provides several incentives to those pharmaceutical manufacturers that develop orphan
drugs, including: a seven-year market exclusivity period during which no drugs, other than the
designated orphan drug, can be licensed or approved “for such disease or condition,” 21 U.S.C.
§ 360cc(a); a tax credit for the clinical testing expenses incurred during the orphan drug’s
development, see 26 U.S.C. § 45C; research grants for that clinical testing, see 21 U.S.C.
§ 360ee; and an exemption from the fees otherwise applicable to new drug applications, see 21
U.S.C. § 379h(a)(1)(F).
The Orphan Drug Act permits the Secretary of Health and Human Services (the
“Secretary”) to designate a drug as an orphan drug. According to statute, “[t]he manufacturer or
the sponsor of a drug may request the Secretary to designate the drug as a drug for a rare disease
or condition.” 21 U.S.C. § 360bb(a)(1). The statute further instructs that, if the Secretary finds
that the drug “is being or will be investigated for a rare disease or condition” and the approval,
certification or licensure of that drug “would be for use for such a disease or condition,” the
Secretary “shall designate the drug as a drug for such disease or condition.” Id. The Food and

available in the United States a drug for such disease or condition will be
recovered from sales in the United States of such drug . . . .
21 U.S.C. § 360bb(a)(2).

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Drug Administration, an agency within HHS, oversees the designation and approval of orphan
drugs. See PhRMA, 43 F. Supp. 3d at 41 n.11 (citing 21 C.F.R. § 316.1(a) (regulation
promulgated by the FDA implementing the orphan-drug related sections of the Federal Food,
Drug, and Cosmetic Act and providing “procedures to encourage and facilitate the development
of drugs for rare diseases or conditions”)); see also 21 U.S.C. § 393(d)(2).
A drug’s designation as an orphan drug may not overlap entirely with its use. Drugs that
carry an orphan designation “can also be used to treat non-rare diseases or conditions.” PhRMA,
43 F. Supp. 3d at 30 (discussing, for example, Prozac, which commonly treats depression but is
designated as an orphan drug to treat autism and body dysmorphic disorder). And a drug may
be designated as an orphan drug even if that drug is also approved to treat a different disease or
condition that does not qualify for orphan-drug designation. See 21 C.F.R. § 316.23(b). Nor
does the designation of a drug as an orphan drug in and of itself afford a pharmaceutical
manufacturer with the ability to market the drug in the United States.

That a drug has been

awarded an orphan designation “does not alter the standard regulatory requirements and process
for obtaining marketing approval.” Exclusion of Orphan Drugs for Certain Covered Entities
Under 340B Program, 78 Fed. Reg. 44,016, 44,017 (July 23, 2013). Indeed, according to HHS
“a large majority of drugs with orphan designations do not have approval to be marketed in the
United States” at all. Id.
B. The 340B Program and the 2010 Extension
The second statutory scheme, section 340B of the Public Health Services Act, “imposes
ceilings on prices drug manufacturers may charge for medications sold to specified health
facilities.” Astra U.S.A., Inc. v. Santa Clara Cnty., Cal., 131 S. Ct. 1342, 1345 (2011); see
generally 42 U.S.C. § 256b. The program was first enacted as part of the Veterans Health Care

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Act of 1992, see PhRMA, 43 F. Supp. 3d at 31, and is managed by the Health Resources Services
Administration (“HRSA”), an agency within HHS, see Astra, 131 S. Ct. at 1345. In order for a
pharmaceutical manufacturer’s products to be covered under the 340B Program, and therefore
eligible for reimbursement from Medicaid, manufacturers are required to enter into a
Pharmaceutical Pricing Agreement with the Secretary calculating a specified ceiling price that
covered entities must pay for the manufacturer’s drugs. See 42 U.S.C. § 256b(a). A
manufacturer must offer drugs “for purchase at or below the applicable ceiling price” to any
entity covered by the 340B Program “if such drug is made available to any other purchaser at
any price.” Id.
In setting ceiling prices for covered drugs, section 340B is designed to “stretch scarce
Federal resources as far as possible, reaching more eligible patients and providing more
comprehensive services.” H.R. Rep. No. 102-384, pt. 2, at 12 (1992). Many of the eligible
health care facilities are “providers of safety net services to the poor.” Astra, 131 S. Ct. at 1345.
As initially enacted in 1992, the covered entities included health care facilities receiving certain
federally-funded grants, state-operated AIDS drug purchasing assistance programs, black lung
clinics, Native Hawaiian health centers, and urban Indian organizations, among other entities.
See 42 U.S.C. § 256b(a)(4)(A)–(L); see also Veterans Health Care Act of 1991, Pub. L. No. 102585, Title VI, § 602(a), 106 Stat. 4943, 4967–68. Disproportionate share hospitals (those
hospitals that serve indigent populations) are also included as covered entities. See 42 U.S.C. §
256b(a)(4)(L).
As part of the Patient Protection and Affordable Care Act (“ACA”) Congress added a
significant number of new categories to the list of covered entities. Those entities are
enumerated in what became subsections (M), (N), and (O) of section 340B(a)(4). Specifically, in

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section 7101 of the ACA Congress added to the 340B Program children’s hospitals that are
excluded from the Medicare prospective payment system, free-standing cancer hospitals that are
excluded from the Medicare prospective payment system, critical access hospitals, rural referral
centers, and sole community hospitals. See Patient Protection and Affordable Care Act, Pub. L.
No. 111-148, § 7101(a), 124 Stat. 119, 821–22 (codified as amended at 42 U.S.C. §
256b(a)(4)(M)–(O)).
As part of the ACA, Congress also directed HHS to create an administrative dispute
resolution process for the 340B Program. The ACA directed the Secretary to “promulgate
regulations to establish and implement an administrative process for the resolution of claims by
covered entities that they have been overcharged” for drugs or of “claims by manufacturers”
following a statutorily-permitted audit of a covered entity. Id. at § 7102 (codified at 42 U.S.C. §
256b(d)(3)). Congress further instructed that the dispute resolution process should “includ[e]
appropriate procedures for the provision of remedies and enforcement of determinations made
pursuant” to that process—which could include sanctions of civil monetary penalties of up to
$5,000 “for each instance of overcharging a covered entity that may have occurred.” Id.
(codified at 42 U.S.C. §§ 256b(d)(3), (d)(1)(B)(vi)(I)). Although the ACA directed the Secretary
to promulgate those regulations within 180 days of the ACA’s passage (March 23, 2010), and the
Secretary did issue a notice of proposed rulemaking to establish that administrative dispute
resolution process, HHS has not yet issued a final rule implementing the process. See 340B
Drug Pricing Program Administrative Dispute Resolution Process, 75 Fed. Reg. 57,233 (Sept.
20, 2010). In omnibus guidance issued last month, HHS indicated only that “[f]uture rulemaking
will address the administrative dispute resolution process.” 340B Drug Pricing Omnibus
Guidance, 80 Fed. Reg. 52,300, 52,301 (Aug. 28, 2015).

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C. The Orphan Drug Exclusion and HHS’s Interpretive Rule
At the same time that Congress added those new entities to the 340B Program, Congress
also narrowed the categories of drugs to which the newly added entities would have access at
reduced prices. In the Health Care and Education Reconciliation Act (“HCERA”)—which
amended the ACA—Congress added an additional subsection to the Act entitled “Exclusion of
Orphan Drugs for Certain Covered Entities.” That subsection (“section 340B(e)”) provides that:
“[f]or covered entities described in subparagraph (M), (N), or (O) of subsection (a)(4), the term
‘covered outpatient drug’ shall not include a drug designated by the Secretary under section 526
of the Federal Food, Drug, and Cosmetic Act for a rare disease or condition.” 2 Health Care and
Education Reconciliation Act, Pub. L. No. 111-152, § 2303, 124 Stat. 1029, 1083 (codified as
amended at 42 U.S.C. § 256b(e)). As a result of section 340B(e), newly covered entities do not
have access to “a drug designated . . . for a rare disease or condition” at a discounted price.
The parties contest the reach of the term “a drug designated . . . for a rare disease or
condition.” In addition, in the immediate aftermath of the ACA’s passage covered entities
expressed concern and confusion about the phrase’s meaning, while pharmaceutical
manufacturers contended that all orphan-designated drugs, whatever their particular use, were
intended to be excluded from the 340B Program for the newly added covered entities. See, e.g.,
A.R. 38–39, 65–68, 70, 85–87, 91–96. In part to eliminate that confusion and to provide “clarity

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Free-standing children’s hospitals had previously been afforded access to the 340B
Program in 2005. See Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 6004, 120 Stat. 4,
61. As a result, and because those entities had previously enjoyed access to orphan drugs at
section 340B prices, an amendment was passed in 2010 to clarify section 340B(e)’s application
to children’s hospitals. See Medicare and Medicaid Extenders Act of 2010, Pub. L. No. 111-309,
§ 204, 124 Stat. 3285, 3289–90. As codified, section 340B(e) now specifies that it applies to
“covered entities described in subparagraph (M) (other than a children’s hospital described in
subparagraph (M)).” 42 U.S.C. § 256b(e) (emphasis added).

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in the marketplace,” the Secretary issued a notice of proposed rulemaking. See Notice of
Proposed Rulemaking, Exclusion of Orphan Drugs for Certain Covered Entities Under 340B
Program, 76 Fed. Reg. 29,183, 29,184 (May 20, 2011).
HHS published its Final Rule on July 23, 2013. That Final Rule interpreted section
340B(e) to provide that, with respect to the newly covered entities, “a covered outpatient drug
does not include orphan drugs that are transferred, prescribed, sold, or otherwise used for the rare
condition or disease for which that orphan drug was designated under section 526 of the [Federal
Food, Drug, and Cosmetics Act].” 42 C.F.R. § 10.21(a). The “practical effect” of that rule is
that, while “the discounted 340B price is not available to newly-added covered entities when
purchasing orphan drugs for their intended orphan use,” when a covered entity instead purchases
a drug for a non-orphan use, it “does receive the 340B discount price.” PhRMA, 43 F. Supp. 2d
at 32.
This Court previously found the Final Rule invalid because “HHS has not been granted
broad rulemaking authority to carry out all the provisions of the 340B program” and the statutory
provisions HHS relied on as authority to promulgate the rule were “specific grants of authority
that do not authorize the orphan drug rule.” Id. at 42, 39. Instead, the Court noted that Congress
granted HHS only “a specific delegation of rulemaking authority to establish an adjudication
procedure to resolve disputes between covered entities and manufacturers.” Id. at 45. In an
alternative, “half-hearted” argument HHS contended that the Final Rule could be upheld as an
interpretive rule. Id. at 45–46. But the Court expressed some skepticism that the rule as
expressed in the specific regulation before the court—which was promulgated by notice and
comment and purported to have a binding legal effect—could properly be classified as an
interpretive rule. Id. at 46. The Court invited HHS to offer further briefing on the issue,

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including to address the question of whether “HHS must first promulgate the rule as interpretive
for it to then be challenged under Skidmore.” Id. at 46–47 & n.19 (citing Kelley v. EPA, 15 F.3d
1100 (D.C. Cir. 1994)). HHS declined the Court’s invitation. See Defs.’ Resp. to Court’s May
23, 2014, Order, PhRMA, No. 1:13-cv-1501-RC (D.D.C. June 12, 2014), ECF No. 45.
Nevertheless, HHS has since issued the Interpretive Rule explaining “how HHS interprets
section 340B(e).” See Availability of Interpretive Rule: Implementation of the Exclusion of
Orphan Drugs for Certain Covered Entities Under the 340B Program, 79 Fed. Reg. 42,801,
42,801 (July 23, 2014). That interpretation—effective as of July 21, 2014—restates, in
substantively identical terms, the interpretation that HHS had reached in its prior Final Rule. 3
A.R. 680–86. According to HHS, “interpreting the statutory language to exclude all indications
for a drug that has an orphan drug designation would be contrary to the Congressional intent of
section 340B(e) to balance the interests of orphan drug development and the expansion of the
340B Program to new entities.” A.R. 684. Thus, HHS again interpreted section 340B(e) as
“excluding drugs with an orphan designation only when those drugs are transferred, prescribed,
sold, or otherwise used for the rare condition or disease for which the drug was designated.”
A.R. 685 (emphasis added). For the same reason, HHS construed section 340B(e) to “not
exclude drugs that are transferred, prescribed, sold, or otherwise used for conditions or diseases
other than for which the drug was designated.” A.R. 685–86.
In its notice, HHS acknowledged that its interpretation would require covered entities and
manufacturers to identify those drugs that have an orphan designation and are used to treat that

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The Interpretive Rule is also available on HRSA’s website. See Interpretive Rule:
Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B
Program, Health Resources & Services Administration,
http://www.hrsa.gov/opa/programrequirements/interpretiverule/interpretiverule.pdf (last visited
Oct. 13, 2015).

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designation. To facilitate that process, HHS proposed to “publish a listing of orphan drug
designations, providing the name of the drug and the designated indication” on “the first day of
the month prior to the end of the calendar quarter.” A.R. 685. Furthermore, HHS cautioned that
“[i]f a covered entity lacks the ability to track drug use by indication, such entity would be
unable to purchase drugs with orphan designations through the 340B Program.” A.R. 685.
In line with its Interpretive Rule, HHS, through HRSA, has also sent letters to
pharmaceutical manufacturers advising them that HRSA had been informed by one or more
covered entities that “the 340B price is not available for at least one of [the manufacturers’]
products with an orphan designation.” See First Am. Compl. Ex. E, ECF No. 11–5. In those
letters, HRSA set forth its interpretation of the statute and stated that the recipient manufacturer
“is out of compliance with statutory requirements as described in HRSA’s interpretive rule.” Id.
(emphasis added). HRSA further cautioned that “[m]anufacturers that do not offer the 340B
price for drugs with an orphan designation when those drugs are used for an indication other than
the rare condition or disease for which the drug was designated . . . are violating section
340B(a)(1) of the PHSA and the terms of their Pharmaceutical Pricing Agreement.” Id.
(emphasis added). Finally, HRSA noted that section 340B(d) requires manufacturers to “refund
covered entities charged more than the statutory ceiling price for covered outpatient drugs” and
requested the recipients to “respond within 30 days to notify HRSA of your plan to repay
affected covered entities and to institute the offer of the discounted price in the future.” Id. On
its website, HRSA has also stated that “[a] manufacturer or covered entity’s failure to comply
with the statutory requirements could subject a manufacturer or covered entity to an enforcement
action by HRSA, which could include refunds to covered entities in the case of overcharges, as

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well as termination of a manufacturer’s Pharmaceutical Pricing Agreement (PPA).” See First
Am. Compl. Ex. D, ECF No. 11–4. 4
PhRMA filed a complaint on October 9, 2014, challenging the Interpretive Rule under
the Administrative Procedure Act (“APA”) as “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” See 5 U.S.C. § 706(2)(A); see also Compl., ECF No. 1;
First Am. Compl., ECF No. 11. Pending before the Court are HHS’s motion for summary
judgment, See ECF No. 14, and PhRMA’s cross-motion for summary judgment, see ECF No. 21.

III. LEGAL STANDARD
A court may grant summary judgment when “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 assessing a motion for summary judgment in an APA case, however,
“the district judge sits as an appellate tribunal.” Am. Bioscience, Inc. v. Thompson, 269 F.3d
1077, 1083 (D.C. Cir. 2001). In such cases the complaint “actually presents no factual
allegations, but rather only arguments about the legal conclusion to be drawn about the agency
action.” Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 (D.C. Cir. 1993).
Therefore, “[t]he entire case on review is a question of law, and only a question of law.” Id. The
Court’s review “is based on the agency record and limited to determining whether the agency
acted arbitrarily or capriciously,” Rempfer v. Sharfstein, 583 F.3d 860, 865 (D.C. Cir. 2009), or
in violation of another standard set out in section 10(e) of the APA, see 5 U.S.C. § 706.

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See also FAQs, Health Resources & Services Administration,
http://www.hrsa.gov/opa/faqs/index.html (last visited Oct. 13, 2015).

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IV. ANALYSIS
In support of its motion for summary judgment, HHS makes two principal arguments.
First, HHS claims that the Interpretive Rule does not constitute a final agency action and,
therefore, is not subject to judicial review. Second, HHS argues in the alternative that, even if
the rule constitutes a final agency action, its interpretation is entitled to Skidmore deference. In
opposition to the motion—and in support of its own motion for summary judgment—PhRMA
contends that the Interpretive Rule is a final agency action and, further, that the rule conflicts
with the plain language of section 340B(e).
At the outset, it is important to note what PhRMA has not challenged. Although the
Court expressed some skepticism that the Final Rule could be sustained as an interpretive rule, it
noted that more briefing was needed to determine whether, among other things, the rule could be
challenged immediately, “or whether HHS must first promulgate the rule as interpretive for it to
be challenged under Skidmore.” PhRMA, 43 F. Supp. 3d at 46. Rather than continue to defend
the original Final Rule, HHS did just that, and the Court entered final judgment because the new
Interpretive Rule was “beyond the scope of the [original] action.” See Order Entering Final
Judgment, PhRMA, No. 1:13-cv-1501-RC (D.D.C. Aug. 27, 2014), ECF No. 55.
In this case, although PhRMA challenges the merits of the Interpretive Rule, the
organization does not appear to challenge HHS’s authority to issue an Interpretive Rule
prospectively setting forth the agency’s reading of the statute. In any event, it is clear that HHS
has the authority to advise the public of its interpretation of the statute. Cf. United States v.
Mead Corp., 533 U.S. 218, 228 (2001) (“[W]hether or not they enjoy any express delegation of
authority on a particular question, agencies charged with applying a statute necessarily make all
sorts of interpretive choices.”). In order to administer the dispute resolution process that

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Congress has instructed HHS to establish, the agency necessarily will be obliged to set forth its
understanding of a pharmaceutical manufacturer’s obligations under the 340B Program. 42
U.S.C. § 256b(d)(3)(A). Moreover, Congress has instructed the Secretary to “designate or
establish a decision-making official or decision-making body within the Department of Health
and Human Services to be responsible for reviewing and finally resolving claims by covered
entities . . . and claims by manufacturers.” Id. § 256b(d)(3)(B)(i) (emphasis added). Quite
obviously, then, to finally resolve those claims, HHS will be required to interpret the reach of
section 340B(e). See Gonzales v. Oregon, 546 U.S. 243, 268 (2006) (after holding that the
Attorney General lacked statutory authority to issue an “Interpretive Rule as a statement with the
force of law,” noting that “[i]f, in the course of exercising his authority, the Attorney General
uses his analysis in the Interpretive Rule only for guidance in deciding whether to prosecute or
deregister [a physician for violating the Controlled Substances Act], then the question remains
whether his substantive interpretation is correct”). Accordingly, even though this Court
concluded that HHS lacks the authority to promulgate the rule as a binding statement of law,
HHS is not forbidden altogether from proffering its interpretation of the statute.
With that understanding in mind, the Court proceeds to address the issues the parties
raise.
A. Whether the Interpretive Rule is a Final Order
The Court first considers whether the Interpretive Rule constitutes a final agency action.
Under the APA, judicial review is available only of a “final agency action.” 5 U.S.C. § 704.
Therefore, if the Interpretive Rule does not constitute a final agency action, PhRMA lacks a

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cause of action under the APA. 5 See Reliable Automatic Sprinkler Co. v. Consumer Prod. Safety
Comm’n, 324 F.3d 726, 731 (D.C. Cir. 2003). The APA defines an “agency action” to include
“an agency rule.” 5 U.S.C. § 551(13). A “rule,” in turn, is defined as including “the whole or a
part of an agency statement of general or particular applicability and future effect designed to
implement, interpret, or prescribe law or policy.” Id. § 551(4) (emphasis added). Accordingly,
HHS’s Interpretive Rule falls within the ambit of an “agency action”; the question is whether
that action is final for purposes of section 704. See Sackett v. EPA, 132 S. Ct. 1367, 1371 (2012)
(“There is no doubt [the compliance order] is agency action, which the APA defines as including
even a ‘failure to act.’ But is it final?” (citation omitted)).
In Bennett v. Spear the Supreme Court articulated a two-part test for determining whether
an agency action is final. See 520 U.S. 154, 177–78 (1997). “First, the action must mark the
‘consummation’ of the agency’s decision-making process—it must not be of a merely tentative
or interlocutory nature.” Id. (citation omitted). Second, “the action must be one by which rights
or obligations have been determined or from which legal consequences will flow.” Id. at 178
(internal quotation marks and citation omitted). Although “Bennett highlights the importance of
avoiding disruption of the administrative decisionmaking process,” CSI Aviation Servs., Inc. v.
U.S. Dep’t of Transp., 637 F.3d 408, 411 (D.C. Cir. 2011), “the Supreme Court has instructed”
that courts must nevertheless “apply the finality requirement in a ‘flexible’ and ‘pragmatic’

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Although the D.C. Circuit has occasionally characterized the issue as “jurisdictional,”
see Bark v. U.S. Forest Serv., 37 F. Supp. 3d 41, 50 (D.D.C. 2014) (citing Cobell v. Norton, 240
F.3d 1081, 1095 (D.C. Cir. 2001)), it is now “firmly established” that “the review provisions of
the APA are not jurisdictional,” Viet. Veterans of Am. v. Shinseki, 599 F.3d 654, 661 (D.C. Cir.
2010). Instead, section 704 simply “limits causes of action under the APA.” Ctr. for Auto Safety
v. Nat’l Highway Traffic Safety Admin., 452 F.3d 798, 806 (D.C. Cir. 2006); see also Reliable
Automatic Sprinkler, 324 F.3d at 731 (noting that “[i]f there was no final agency action here,
there is no doubt that [the party] would lack a cause of action under the APA”).

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way,” Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 435 (D.C. Cir. 1986) (quoting Abbott Labs. v.
Gardner, 387 U.S. 136, 149–50 (1967)). In this case, HHS concedes that the Interpretive Rule
“satisfies the first part of the Bennett test” because the rule “is the product of mature
administrative judgment,” “was issued after extensive deliberation,” and is “not a preliminary or
tentative agency conclusion on the meaning of subsection 340B(e).” Defs.’ Mem. Supp. Summ.
J. at 11. Accordingly, for purposes of the finality analysis the only remaining issue before this
Court is whether the Interpretive Rule is an agency action by which “rights or obligations have
been determined or from which legal consequences will flow.” Bennett, 520 U.S. at 178
(internal quotation marks and citation omitted).
In support of its argument that the Interpretive Rule does not constitute a final agency
action, HHS relies heavily on the fact that the rule is an interpretive one. In its motion for
summary judgment, and particularly its reply, 6 HHS expends considerable energy arguing that
the rule is not a legislative rule and, for that reason alone, is not yet subject to review under the
APA. See Defs.’ Mem. Supp. Summ. J. at 13; Defs.’ Reply at 3–6, ECF No. 24. In doing so,
HHS seems to suggest that the interpretive rule is categorically shielded from judicial review—
and that “there is no final agency action”—“until HHS initiates an enforcement action against a
drug manufacturer and imposes a penalty for not complying with the statutory provision.” Defs.’
Mem. Supp. Summ. J. at 15; see also Defs.’ Reply at 5 (contending that PhRMA’s argument
“displays a fundamental misunderstanding of the difference between interpretive and legislative
rules”).

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On the same day, HHS separately filed two memoranda entitled “Memorandum in
Opposition to Plaintiff’s Motion for Summary Judgment and Reply to Plaintiff’s Opposition to
Defendants’ Motion for Summary Judgment.” See ECF Nos. 23, 24. The Court has reviewed
both filings and they appear identical. With that understanding, the Court cites only to ECF No.
24.

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If that is HHS’s position, it is contrary to D.C. Circuit and Supreme Court precedent.
Although HHS’s current rule is undoubtedly an interpretive rule in light of this Court’s prior
holding, the rule’s particular classification is beside the point. The D.C. Circuit has instructed
that Bennett “does not foreclose all pre-enforcement challenges.” CSI Aviation, 637 F.3d at 411.
Indeed, the Circuit has previously noted that an argument that “final agency action . . . requires
the completion of a full enforcement action” is “mistaken.” Id. at 413. And in a recent case the
Supreme Court found that a pre-enforcement compliance order issued by the EPA was
immediately subject to challenge under the APA even though the EPA had taken no steps to
actually enforce that order. See Sackett, 132 S. Ct. at 1371; see also Bimini Superfast Operations
LLC v. Winkowski, 994 F. Supp. 2d 106, 114 (D.D.C. 2014) (discussing Sackett). Admittedly,
interpretive rules, guidance policies, and other general agency statements that lack the force of
law “generally do not qualify” as a final agency action. Am. Tort Reform Ass’n v. Occupational
Safety & Health Admin., 738 F.3d 387, 395 (D.C. Cir. 2013). But, “an agency’s other
pronouncements”—beyond legislative rules—“can, as a practical matter, have a binding effect”
which contributes to a finding that the action is “final.” Appalachian Power Co. v. EPA, 208
F.3d 1015, 1021, 1022 (D.C. Cir. 2000); cf. Barrick Goldstrike Mines Inc. v. Browner, 215 F.3d
45, 48 (D.C. Cir. 2000) (“That the issuance of a guideline or guidance may constitute final
agency action has been settled in this circuit for many years.”). Indeed, the D.C. Circuit and this
Court have identified exceptions—and have done so specifically in cases, like the one here,
where the agency issued a rule, guidance document, or letter setting forth its view of the law and
threatening enforcement if the regulated entity did not comply. See, e.g., Barrick, 215 F.3d at
49; CSI Aviation, 637 F.3d at 412; Bimini Superfast, 994 F. Supp. 2d at 114–18; cf. Ctr. for Auto
Safety v. Nat’l Highway Traffic Safety Admin., 452 F.3d 798, 807 (D.C. Cir. 2006) (noting that

16

finality can exist “when an agency merely threatens enforcement of a [policy guideline], if the
guideline is binding on its face or in practice”).
To be sure, in some cases, including those that HHS relies upon, an agency’s preenforcement activity will be deemed non-final. See Defs.’ Mem. Supp. Summ. J. at 15–16
(citing, e.g., Reliable Automatic Sprinkler, 324 F.3d at 732). These conflicting decisions merely
confirm that whether an agency’s pre-enforcement action is subject to judicial review “varies
based on the circumstances.” CSI Aviation, 637 F.3d at 414 n.2. Contrary to the agency’s
position, however, interpretive rules or other pronouncements setting forth an agency’s reading
of a statute are not categorically insulated from review before a specific enforcement proceeding
has commenced. See, e.g., Appalachian Power Co., 208 F.3d at 1023 (“[T]he Guidance, insofar
as relevant here, is final agency action, reflecting a settled agency position which has legal
consequences both for State agencies administering their permit programs and for companies.”);
see also Sackett, 132 S. Ct. at 1371.
One recent D.C. Circuit case concluding that an agency’s pre-enforcement resolution of a
question of statutory interpretation constituted a final agency action is particularly instructive
here. In CSI Aviation Services, Inc. v. United States Department of Transportation, the Circuit
considered whether a Department of Transportation (“DOT”) cease-and-desist letter, issued in
advance of any enforcement action, was subject to judicial review. See 637 F.3d at 410. The
petitioner, CSI Aviation Services, Inc., had contracted with the General Services Administration
(“GSA”) to provide air-charter services for federal agencies. Id. Shortly before CSI prevailed in
a bid to renew its contract with the GSA, the DOT requested information from CSI “to determine
whether the company was engaging in ‘indirect air transportation’ without the certificate of
authority required by the Federal Aviation Act.” Id. (citing 49 U.S.C. § 41101(a)). After

17

considering the information CSI had presented, DOT informed CSI that “CSI has been acting as
an unauthorized indirect air carrier in violation of section 41101,” that the company faced “civil
penalties of up to $27,500 per violation,” that “[e]ach day such violation continues is a separate
violation,” and, finally, that the DOT would “refrain from taking enforcement action” if CSI
“cease[d] and desist[ed] from any further activity that would result in it engaging in indirect air
transportation.” Id. Although six other companies had received similar letters, only CSI chose
not to comply with the letter and challenged the agency’s interpretation of the Federal Aviation
Act. Id. At the time the case was before the D.C. Circuit, DOT had granted CSI a temporary,
time-limited exemption from the certification requirement and had not yet pursued an
enforcement action. Id. at 411.
The Circuit began its analysis by noting that the Supreme Court’s decision in Bennett
“does not foreclose all pre-enforcement challenges.” Id. Instead, and relying on earlier Circuit
precedent, the Circuit set forth three specific factors that a court should consider when
determining whether a pre-enforcement action constitutes final agency action. 7 Id. at 412 (citing

7

That earlier precedent, Ciba-Geigy Corp. v. EPA, was framed in terms of ripeness. See
801 F.2d at 434. The D.C. Circuit has since held that the question of whether an agency’s action
is a final one requires an analysis “complementary” to a ripeness inquiry. See, e.g., Reckitt
Benckiser Inc. v. EPA, 613 F.3d 1131, 1137 (D.C. Cir. 2010); CSI Aviation, 637 F.3d at 411. For
that reason, and as the Circuit has done, the Court uses the caselaw relative to both issues to
inform its analysis. See, e.g., Reckitt Benckiser, 613 F.3d at 1137.
At the same time, and although finality and ripeness overlap considerably, the questions
remain distinct. See, e.g., Barrick, 215 F.3d at 47–49 (analyzing “final agency action” and
“ripeness” separately). For example, even if an agency action is “‘final’ for purposes of the APA
. . . issues still may not be fit for review where the agency retains considerable discretion to
apply the new rule on a case-by-case basis, particularly where there is a complex statutory
scheme or there are other difficult legal issues that are implicated by the agency action.” Sprint
Corp. v. FCC, 331 F.3d 952, 956 (D.C. Cir. 2003). In this case, the government has not argued
that the issues are not ripe for adjudication even if the Court concludes that the Interpretive Rule
is a final one. To the extent that ripeness is a jurisdictional requirement, however—and the
Court therefore has a duty to consider it sua sponte, cf. Nat’l Park Hospitality Ass’n v. Dep’t of
Interior, 538 U.S. 803, 808 (2003) (noting that “the question of ripeness may be considered on a
18

Ciba-Geigy Corp., 801 F.2d at 435–37). First, a court should ask whether “the agency had taken
a ‘definitive’ legal position concerning its statutory authority.” Id. (quoting Ciba-Geigy Corp.,
801 F.2d at 436). Second the court should consider whether “the case present[s] ‘a purely legal’
question of ‘statutory interpretation.’” Id. (quoting Ciba-Geigy Corp., 801 F.2d at 435). Finally,
a court should determine whether the agency’s action “impose[s] an immediate and significant
practical burden on [the regulated entity].” Id. (citing Ciba-Geigy Corp., 801 F.2d at 437); see
also Bimini Superfast, 994 F. Supp. 2d at 118 (invoking the CSI Aviation test).
The D.C. Circuit concluded that all three factors were present. DOT’s initial warning
letter had “declared in no uncertain terms” that CSI was not in compliance with the Federal
Aviation Act, and “gave no indication that it was subject to further agency consideration or
possible modification.” Id. at 412 (internal quotation marks and citation omitted). The issue also
presented a “purely legal question of statutory interpretation” without the existence of any
“disputed facts that would bear on [the] question.” Id. (internal quotation marks and citation
omitted). Finally, the Circuit held that DOT had “effectively declared the company’s operations
unlawful” which, “[a]t the very least . . . cast a cloud of uncertainty over the viability of CSI’s
ongoing business.” Id. DOT’s cease and desist letter “put the company to the painful choice
between costly compliance and the risk of prosecution at an uncertain point in the future.” Id.
As the Circuit explained, that “conundrum” is “‘the very dilemma [the Supreme Court has

court’s own motion”)—the Court concludes that HHS’s Interpretive Rule is ripe for review, and
that judicial intervention would not “inappropriately interfere with further administrative action,”
Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726, 733 (1998). This challenge is ripe both
because the Interpretive Rule presents a purely legal question of statutory interpretation, and
would therefore not benefit from a more concrete setting, and, as explained below, because the
rule also poses a “hardship to the parties of withholding court consideration.” See Nat’l Park
Hospitality Ass’n, 538 U.S. at 808; see also Reckitt Benckiser, 613 F.3d at 1137; Barrick, 215
F.3d at 49.

19

found] sufficient to warrant judicial review.’” Id. (alteration in original) (quoting Ciba-Geigy,
801 F.2d at 439).
In this case, the Court concludes that all three CSI Aviation factors are met and that
HHS’s Interpretive Rule similarly represents a definitive and purely legal determination that puts
pharmaceutical manufacturers to the painful choice of complying with HHS’s interpretation or
risking the possibility of an enforcement action at an uncertain point in the future.
First, given HHS’s concession that the Interpretive Rule represents the consummation of
the agency’s decisionmaking process, the Court has no trouble concluding that the agency has
“taken a ‘definitive’ legal position.” Id. at 412. The Interpretive Rule itself admits to “no
ambiguity” and provides no indication that it is “subject to further agency consideration.” Id.
(quoting Ciba-Geigy, 801 F.2d at 436–37); see also A.R. 680–86. The enforcement letters sent
to manufacturers also indicate as much. Those letters state that a manufacturer who has not
offered orphan-designated drugs at the 340B price when those drugs are not used to treat a rare
condition or disease “is out of compliance with statutory requirements” and “[is] violating
section 340B(a)(1) of the PHSA.” First Am. Compl. Ex. E (emphasis added). The D.C. Circuit
has found similar wording in pre-enforcement letters definitive. See, e.g., CSI Aviation, 637 F.3d
at 412; Reckitt Benckiser Inc. v. EPA, 613 F.3d 1131, 1138 (D.C. Cir. 2010) (holding that EPA’s
interpretation of statute, as contained in a pre-enforcement letter, was sufficiently final where the
letter “unequivocally informed” the party that its products “would be considered misbranded”
under the statute (emphasis in original)).
Second, the Interpretive Rule clearly raises a pure question of statutory interpretation.
The rule supplies HHS’s reading of the statute as applied to all manufacturers that produce drugs

20

with an orphan designation. 8 There is nothing to indicate that the administrative record produced
during a specific enforcement proceeding would change HHS’s legal interpretation. See Bimini
Superfast, 994 F. Supp. 2d at 117 (holding that a Customs and Border Protection letter detailing
the agency’s interpretation of the Immigration and Nationality Act constituted final agency
action where “[t]here is no indication that any such enforcement process would change CBP’s
legal position or require that an agency record be developed given the purely legal nature of
CBP’s position”).
Third—and most vigorously contested by the parties—the Court finds that the
Interpretive Rule imposes a significant burden on pharmaceutical manufacturers and other
regulated entities alike. As an initial matter, HHS claims that the Interpretive Rule, itself, “does
not alter the legal obligations of the program participants” and that the rule has no legal force
“independent of any binding effect that the statute itself may have.” Defs.’ Mem. Supp. Summ.
J. at 12–13. HHS repeatedly argues that the statute—and not the Interpretive Rule, itself—is
binding on the parties. But this purported distinction is a hollow one without any meaningful
difference. By virtue of the definitive interpretation the agency has settled on, as far as the
agency is concerned the Interpretive Rule and the statutory requirements are one in the same.
Indeed, the agency’s letters to manufacturers indicate that HHS believes entities are “out of

8

For this reason the Interpretive Rule and HHS’s follow-on letters here are also distinct
from those in the cases HHS cites in its reply, in which courts found no final agency action. See
Defs.’ Reply at 10–11. For example, in Center for Auto Safety, the D.C. Circuit noted that the
agency’s guidelines regarding the legality of regional automobile recalls was “conditional” and
that the “agency remain[ed] free to exercise discretion in assessing proposed recalls” on a caseby-case basis. 452 F.3d at 809; see also Reliable Automatic Sprinkler, 324 F.3d at 734 (finding
nonfinal action where “the agency has made it clear that the interpretation of ‘consumer product’
with respect to sprinkler heads remains to be determined” (emphasis added)). By contrast here,
as in CSI Aviation, HHS’s Interpretive Rule concerns only the meaning of section 340B(e),
“which is antecedent to and distinct from whether [any manufacturer] has violated the law.” 637
F.3d at 412.

21

compliance with statutory requirements as described in HRSA’s interpretive rule” when they fail
to offer orphan-designated drugs used to treat other conditions at section 340B prices. First Am.
Compl. Ex. E (emphasis added). And on its website HRSA further notes that “[a] manufacturer
or covered entity’s failure to comply with the statutory requirements could subject a
manufacturer or covered entity to an enforcement action by HRSA, which could include refunds
to covered entities in the case of overcharges, as well as termination of a manufacturer’s
Pharmaceutical Pricing Agreement (PPA).” See First Am. Compl. Ex. D (emphasis added).
Accordingly, HHS’s reliance on those cases in which “an agency merely expresses its
view of what the law requires of a party” is misplaced. See Defs.’ Mem. Supp. Summ. J. at 17
(quoting Ctr. for Auto Safety, 452 F.3d at 808); see also id. at 13–14. Even those cases
acknowledge that there are “particular circumstances in which an agency’s taking a legal
position itself inflicts injury or forces a party to change its behavior, such that taking that
position may be deemed final agency action.” AT&T Co. v. EEOC, 270 F.3d 973, 975–76 (D.C.
Cir. 2006); see also Ctr. for Auto Safety, 452 F.3d at 808. The Interpretive Rule very clearly
requires pharmaceutical manufacturers and covered entities alike to change their behavior in a
not insignificant way.
HHS’s claim that the rule “does not independently impose any obligations on the
program participants,” Defs.’ Reply at 6, is particularly unpersuasive in light of the new tracking
and monitoring obligations that the Interpretive Rule explicitly mandates. As the Court
previously acknowledged, HHS’s rule “imposes duties on the covered entities to maintain
records of compliance.” PhRMA, 43 F. Supp. 3d at 33. The vacated final rule specifically
required covered entities to “ensur[e] that any orphan drugs purchased through the 340B
Program are not transferred, prescribed, sold, or otherwise used for the rare condition or disease

22

for which the orphan drugs are designated under section 526 of the FFDCA.” 42 C.F.R. §
10.21(c)(1). Pursuant to its Interpretive Rule, HHS has now imposed identical duties. HHS
explained that it “will publish a listing of orphan drug designations, providing the name of the
drug and the designation indication” on “the first day of the month prior to the end of the
calendar quarter.” A.R. 685. The Rule further cautions that, “[i]f a covered entity lacks the
ability to track drug use by indication, such entity would be unable to purchase drugs with
orphan designations through the 350B program.” Id.
Whether to comply with the Interpretive Rule presents pharmaceutical manufacturers,
too, with a “painful choice between costly compliance and the risk of prosecution at an uncertain
point in the future” similar to the choice faced by the petitioner in CSI Aviation. 637 F.3d at 412.
That choice is “costly” in at least three ways. First, and quite obviously, under the agency’s
interpretation of the statute, pharmaceutical manufacturers will be required to sell orphan drugs
at reduced prices when covered entities use those drugs to treat ailments other than the rare
disease or condition for which they have been designated. Those losses themselves impose a
financial cost.
There is also evidence that implementing the Interpretive Rule will have a “direct effect”
on pharmaceutical manufacturers’ “day-to-day business.” Reckitt Benckiser, 613 F.3d at 1138
(quoting Abbott Labs, 387 U.S. at 152). Various pharmaceutical company officials have
submitted sworn declarations representing that, to determine whether covered entities are in fact
using orphan-designated drugs to treat non-rare conditions, their companies must “make changes
to [their] own accounting, contracting and government price reporting systems and require the
wholesaler[s] through whom [they] sell [their] 340B drugs to make changes to their tracking
system.”

See Am. Decl. of Derek L. Asay ¶ 9, PhRMA, No. 1:13-cv-1501-RC (D.D.C. Oct. 22,

23

2013), ECF No. 15; see also Decl. of Paul Maillet, ¶¶ 8–9, PhRMA, No. 1:13-cv-1501-RC
(D.D.C. Sept. 30, 2013), ECF. No. 3–6; Decl. of Pfizer Inc. ¶ 9, PhRMA, No. 1:13-cv-1501-RC
(D.D.C. Oct. 1, 2013), ECF. No. 11. Those officials have further alleged that they will be forced
to increase their auditing and monitoring expenditures to implement those changes. 9 See, e.g.,
Decl. of Paul Maillet ¶¶ 8–9. The D.C. Circuit has found similar requirements that a regulated
entity track its business activities sufficient to constitute an immediate and significant burden on
a regulated entity. See, e.g., Reckitt Benckiser, 613 F.3d at 1138 (finding hardship where “sworn
declarations by company officials” showed that “the company has been forced to spend hundreds
of thousands of dollars on research and development of []compliant products” and expected to
incur “an additional one million dollars to conclude development”); Barrick Goldstrike, 215 F.3d
at 48 (noting that agency’s guidance extending application of the Emergency Planning and
Community Right-to-Know Act to the metal mining industry had “legal consequences” because
the plaintiff was now “bound to keep track of its movements of waste rock and report the
movements as releases of toxic substances”).
Most tellingly, however, is the fact that HHS contends that failure to comply with the
statutory requirements—as interpreted by its Interpretive Rule—will expose manufacturers to
significant penalties in future enforcement proceedings. Sackett, 132 S. Ct. at 1372 (noting that
pre-enforcement compliance order exposed the petitioners “to double penalties in a future
enforcement proceeding”). Under section 340B, manufacturers must refund covered entities if

9

These declarations refute HHS’s claim that “Plaintiff has not offered any detail of the
‘significant changes’ they are required to make in their daily ‘business practices.’” Defs.’ Reply
at 6. Moreover, they refute HHS’s comparison to the Department of Labor’s compliance letters
in Rhea Lana, Inc. v. U.S. Dep’t of Labor, which another judge on this Court concluded did not
constitute final agency action because the letters “[did] not affirmatively compel Rhea Lana to do
anything.” 74 F. Supp. 3d 240, 245 (D.D.C. 2014), appeal docketed, No. 15-5014 (D.C. Cir. Jan.
21, 2015); see Defs.’ Reply at 10–11.

24

they have charged more than the ceiling price and HHS has instructed manufacturers to “notify
HRSA of [their] plan[s] to repay affected covered entities.” First Am. Compl. Ex. E. In
addition, the statute provides for a civil monetary penalty of up to $5,000 “for each instance of
overcharging a covered entity that may have occurred.” 42 U.S.C. § 256b(d)(1)(B)(vi)(II). A
manufacturer’s Pharmaceutical Pricing Agreement may also be cancelled altogether, which
PhRMA represents, and HHS has not refuted, would result in a “loss of Medicaid and Medicare
Part B reimbursement for all of the manufacturer’s products.” Pl.’s Mem. Opp. Summ. J. at 16;
see also Def.’s Mem. Summ. J. at 4 (“The manufacturers must enter into such agreements as a
condition of receiving reimbursement from Medicaid.”); Astra, 131 S. Ct. at 1345
(“Manufacturers’ eligibility to participate in state Medicaid programs is conditioned on their
entry into PPAs for covered drugs purchased by 340B entities.”).
These penalties impose a particularly acute burden in this case because, at present,
manufacturers have no meaningful recourse to dispute HHS’s reading of section 340B(e) or to
avoid the continued accumulation of potential liability. HHS is now five years overdue in
complying with Congress’s mandate that it set up an administrative dispute resolution process
within 180 days of the ACA’s passage. HHS has maintained only that “[f]uture rulemaking” will
address the dispute resolution process. 340B Drug Pricing Omnibus Guidance, 80 Fed. Reg. at
52,301. And although that process, as envisioned by Congress, would appear to allow a
manufacturer to initiate proceedings, see 42 U.S.C. § 256b(d)(3)(A) (instructing HHS to develop
a process to resolve “claims by manufacturers”), until that system is implemented manufacturers

25

are left without any remedy. “[E]ach day they wait for the agency to drop the hammer, they
accrue” significant penalties. Sackett, 132 S. Ct. at 1372.10
In an effort to brush aside these very real consequences, HHS claims that they represent
merely practical, not legal, effects and obligations. But the concept of “[f]inality resulting from
the practical effect of an ostensibly non-binding agency proclamation is a concept” the D.C.
Circuit “ha[s] recognized.” Nat’l Ass’n of Home Builders v. Norton, 415 F.3d 9, 15 (D.C. Cir.
2005). Indeed, CSI Aviation spoke only of whether the DOT’s action there “imposed an
immediate and significant practical burden” on the regulated entity. 637 F.3d at 412 (emphasis
added). Therefore, regardless of classification, the burdens posed by HHS’s Interpretive Rule
here are sufficiently significant to rise to the level of a final agency action. 11
Ultimately, the Court finds that this case is in line with CSI Aviation and far afield from
those cases in which an agency’s guidance was “conditional,” had not “commanded, required,
ordered, or dictated” any specific action, or merely presented entities with the option of

10

To state a claim the APA also requires that the party seeking review have “no other
adequate remedy in a court.” 5 U.S.C. § 704; see also Sackett, 132 S. Ct. at 1372. HHS has not
argued that PhRMA’s claim is non-actionable on this ground; in fact, neither party addresses the
point. In any event, because there is currently no other mechanism—following an enforcement
proceeding or otherwise—for PhRMA to seek review of the Interpretive Rule, the Court
concludes that PhRMA and the pharmaceutical manufacturers it represents lack an adequate
alternative remedy. Cf. Sackett, 132 S. Ct. at 1372; accord Bimini Superfast, 994 F. Supp. 2d at
117 n.4.
11

At least one D.C. Circuit case seems to reject unequivocally, as inconsistent with
Bennett, the argument that practical consequences suffice to present a final agency action. See
Ctr. for Auto Safety, 452 F.3d at 811. As an initial matter, the Court has some doubt that the
civil monetary penalties and the threat of the pricing agreement cancelation that manufacturers
face here could be properly classified as “practical” and not “legal” burdens. But, regardless,
more recent D.C. Circuit caselaw speaks of practical burdens, alone. Moreover, as an astute
decision by another member of this Court recently pointed out, Bennett in fact speaks in the
alternative and states that final agency actions are those from which “‘rights or obligations have
been determined’ or from which ‘legal consequences flow.’” Bimini Superfast, 994 F. Supp. 2d
at 114 n.3 (emphasis in original) (quoting Bennett, 520 U.S. at 177–78). Therefore, this Court
does not view the consideration of practical burdens as conflicting with Bennett’s holding.

26

voluntary compliance. See Ctr. for Auto Safety, 452 F.3d at 809. Thus, HHS’s attempt to
distinguish CSI Aviation by arguing that its action “lacks the legal consequences that the order in
CSI Aviation Services had,” is unpersuasive. 12 Defs.’ Reply at 7–8. “‘[A]n agency may not
avoid judicial review merely by choosing the form of a letter,” or a purportedly non-binding
Interpretive Rule, “to express its definitive position on a general question of statutory
interpretation.’” CSI Aviation, 637 F.3d at 412 (quoting Ciba-Geigy, 801 F.2d at 438 n.9).
Instead, a constellation of factors counsels in favor of finding a final agency action here: HHS’s
Interpretive Rule presents a pure question of statutory interpretation; the Interpretive Rule
requires both covered entities and pharmaceutical manufacturers alike to make significant
changes to their business practices; despite HHS’s urging that manufacturers’ wait until a formal
enforcement proceeding is initiated to challenge the Interpretive Rule, there currently exists no
formal dispute resolution mechanism and the timing of future rulemaking remains undetermined;
and HHS has informed manufacturers that it considers those who do not adopt its Interpretive
Rule out of compliance with the statute—accruing potential penalties until such time as HHS
chooses to take action. “Having thus flexed its regulatory muscle, [HHS] cannot now evade
judicial review.” CSI Aviation, 637 F.3d at 413. Accordingly, the Court concludes that the
Interpretive Rule constitutes final agency action within the ambit of 5 U.S.C. § 704.

12

HHS also argues that Ciba-Geigy is distinguishable because it involved a processbased injury (the EPA there had contended that it could cancel the petitioner’s pesticide
registration without notice and a hearing, see 801 F.2d at 433) and that, unlike the petitioner
there, pharmaceutical manufacturers here can make their case in a future enforcement
proceeding. See Defs.’ Reply at 8. As just explained, however, the possibility of an enforcement
proceeding is currently a hollow one. And, in any event, in CSI Aviation the Circuit did not find
the substantive, non-procedural-based ground for review raised there any less final at a preenforcement stage. See 637 F.3d at 412.

27

B. The Validity of HHS’s Interpretive Rule
The Court thus proceeds to determine whether HHS’s Interpretive Rule is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” See 5 U.S.C. §
706(2)(A). Resolution of this question turns on the interpretation of section 340B(e). The
interpretation of an administrative agency’s guiding statute typically “follows a two-step
process.” PhRMA, 43 F. Supp. 3d at 35. “First, always, is the question whether Congress has
directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end
of the matter; for the court, as well as the agency, must give effect to the unambiguously
expressed intent of Congress.” Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S.
837, 842–43 (1984). However, if “Congress has not directly addressed the precise question at
issue, the court does not simply impose its own construction of the statute, as would be necessary
in the absence of an administrative interpretation.” Id. at 843 (footnote omitted). In this latter
situation, a court instead proceeds to step two of the Chevron framework: “[I]f the statute is
silent or ambiguous with respect to the specific issue, the question for the court is whether the
agency’s answer is based on a permissible construction of the statute.” Id. “[A] court may not
substitute its own construction of a statutory provision for a reasonable interpretation by the
administrator of an agency.” Id. at 844.
Yet, deference in the face of a silent or ambiguous statute under Chevron “is warranted
only ‘when it appears that Congress delegated authority to the agency generally to make rules
carrying the force of law, and that the agency interpretation claiming deference was promulgated
in the exercise of that authority.’” Gonzales, 546 U.S. at 255–56 (emphasis in original) (quoting
Mead Corp., 533 U.S. at 226–27). As this Court previously held, HHS was not delegated
authority to make binding rules that carry the force of law related to section 340B(e). See

28

PhRMA, 43 F. Supp. 3d at 45. Thus, if the Court does find an ambiguity, HHS’s interpretation
“does not receive Chevron deference,” but instead “receives deference only in accordance with
Skidmore” and the Court will “follow [the] agency’s rule only to the extent it is persuasive.”
Gonzales, 546 U.S. at 268, 269. In either event, however, “it is elementary that ‘no deference is
due to agency interpretations at odds with the plain language of the statute itself.’” Smith v. City
of Jackson, Miss., 544 U.S. 228, 266 (2005) (quoting Pub. Emps. Ret. Sys. of Ohio v. Betts, 492
U.S. 158, 171 (1989)). As explained below, the Court concludes that HHS’s interpretation here
is contrary to the plain language of section 340B(e). 13
The Court starts, as it must, with the text of section 340B(e) which provides:
(e) Exclusion of orphan drugs for certain covered entities
For covered entities described in subparagraph (M) (other than a
children’s hospital described in subparagraph (M)), (N), or (O) of
subsection (a)(4), the term “covered outpatient drug” shall not
include a drug designated by the Secretary under section 360bb of
Title 21 for a rare disease or condition.
42 U.S.C. § 256b(e) (emphasis added). By its plain terms, the orphan drug exclusion applies to a
drug that is “designated . . . for a rare disease or condition.” The section refers only to the
designation of that drug, and makes no mention of whether the so-designated drug is in fact used
by the covered entity to treat the rare disease or condition for which it was designated. This
choice of language is informative; as HHS, itself notes, and as FDA regulations make clear, a
drug can be designated as an orphan drug even if that drug has uses—or has previously been

13

HHS argues that if the Interpretive Rule “has enough legal effect to be final agency
action, then it has enough effect to be entitled to Chevron deference as well.” Defs.’ Mem. Supp.
Summ. J. at 18 n.1. Not so. As explained above, even non-legislative rules like interpretive
rules or guidance policies may be classified as a final agency action in circumstances like these.
But that conclusion does not alter Congress’s delegation of authority. In any event, even were
Chevron deference appropriate here, because the Court’s conclusion rests on the plain language
of section 340B(e), HHS’s interpretation would nevertheless fail at Chevron step one. Smith,
544 U.S. at 266.

29

approved and marketed—to treat conditions that are not rare ones. See Exclusion of Orphan
Drugs, 78 Fed. Reg. at 44,017 (“FDA will designate a drug for a rare disease or condition as an
orphan drug in situations where the drug is also approved for a different disease or condition that
does not qualify for such a designation.”); 21 C.F.R. § 316.23(b) (“A sponsor may request
orphan-drug designation of an already approved drug for an unapproved use without regard to
whether the prior marketing approval was for a rare disease or condition”).
To support its reading of the exclusion as tied to the drug’s use, HHS places controlling
weight on the phrase “for a rare disease or condition.” According to HHS, that phrase
“effectively limits the scope of the exclusion,” because it modifies the word “drug” and therefore
already “convey[s] [a] meaning” cabined to a drug’s particular “uses or indications.” Defs.’
Reply at 12–13; see also Defs.’ Mem. Supp. Summ. J. at 19–20.
While HHS’s reading might appear plausible at first glance, and when confined solely to
section 340B(e), “[w]hen interpreting a statute, we examine related provisions in other parts of
the U.S. Code.” Boumediene v. Bush, 553 U.S. 723, 776 (2008). When one reads the statute in
the context of its related provisions, it becomes clear that HHS’s interpretation runs counter to
the way Congress has used the phrase “a drug designated . . . for a rare disease or condition” or
similar wording throughout the U.S. Code. In each case, although Congress refers to a drug “for
a rare disease or condition” or a drug so “designated,” Congress has added additional language
to specify that the provision’s applicability is limited to occasions when that designated drug is
actually used to treat the rare disease or condition.
A typical example is 42 U.S.C. § 1395l(t)(6)(A)(i). That statute, part of the Medicaid
program, provides for prospective, pass-through payments of certain drugs and medical devices.
The statute limits the payments for “[c]urrent orphan drugs,” however, to “[a] drug or biological

30

that is used for a rare disease or condition with respect to which the drug or biological has been
designated as an orphan drug under section 360bb of Title 21 . . . .” 42 U.S.C. §
1395l(t)(6)(A)(i). Like section 340B(e), this section specifies that it applies only to a drug that
has been designated under 21 U.S.C. § 360bb. Compare id. (applying to a “drug or biological
. . . designated as an orphan drug under section 360bb of Title 21”), with 42 U.S.C. § 256b(e)
(applying to “a drug designated by the Secretary under section 360bb of Title 21 for a rare
disease or condition”). Unlike section 340B(e), however, the section further specifies that the
benefit is only available for those drugs when “used for a rare disease or condition” for which it
has been designated. 42 U.S.C. § 1395l(t)(6)(A)(i) (emphasis added).
It is a “cardinal principle of statutory construction that we must give effect, if possible, to
every clause and word of a statute.” Williams v. Taylor, 529 U.S. 362, 404 (2000) (internal
quotation marks and citation omitted). In section 1395l, the negative implication from
Congress’s use of further qualifying language is that Congress’s use of the phrase “designated as
an orphan drug under section 360bb of Title 21,” alone, would have not have cabined the
provision’s scope to only those pass-through payments for drugs when used to treat the rare
disease or condition but would have applied, more generally, to all of the “designated” orphan
drug’s uses—rare or otherwise. Otherwise, the additional language providing that the provision
applies to a drug “that is used for a rare disease or condition” for which it has been designated is
unnecessary surplusage.
Other examples abound. Consider 21 U.S.C. § 379h(a)(1)(F), which exempts a “human
drug application for a prescription drug product that has been designated as a drug for a rare
disease or condition” from the fees typically assessed for such applications. (Emphasis added).
According to the subsection, the exception applies “unless the human drug application includes

31

an indication for other than a rare disease or condition.” 21 U.S.C. § 379h(a)(1)(F) (emphasis
added). This subsection includes both the language “designated as a drug for a rare disease or
condition” and the further qualification that the application must pertain solely to indications for
that rare disease or condition. Again, if a prescription drug product “designated as a drug for a
rare disease or condition” by definition only described that drug product when used to treat those
rare diseases or conditions, Congress would not have needed to specify that the provision does
not apply when that drug product’s alternative indications are included.
Similar in scope is 26 U.S.C. § 45C—entitled “Clinical testing expense for certain drugs
for rare disease or conditions”—which provides a tax credit for the clinical testing expenses
incurred during the orphan drug’s development. The statute specifies that the credit applies to
clinical testing “for a drug being tested for a rare disease or condition” and must occur “after the
date such drug is designated under section 526 of [the Federal Food, Drug, and Cosmetic Act].”
26 U.S.C. §§ 45C(b)(2)(A)(i), (ii)(I). But the statute goes on to specify that clinical testing
should be taken into account “only to the extent such testing is related to the use of a drug for the
rare disease or condition for which it was designated under section 526 of the Federal Food,
Drug, and Cosmetic Act.” Id. § 45C(b)(2)(B) (emphasis added). 14

14

Another section of the ACA, in which section 340B(e) was enacted, is also
informative. Although the Supreme Court has cautioned that the ACA “does not reflect the type
of care and deliberation that one might expect of such significant legislation,” King v. Burwell,
135 S. Ct. 2480, 2492 (2015), it is nevertheless telling that Congress did add use- or indicationlimiting language elsewhere in the ACA when referring to certain benefits that apply to orphandesignated drugs. Section 9008(b), which applies an excise tax to branded prescription drugs,
exempts orphan drugs until “the date on which such drug or biological product is approved . . .
for marketing for any indication other than the treatment of the rare disease or condition with
respect to which [the section 45C tax credit] was allowed.” See Patient Protection and
Affordable Care Act, Pub. L. No. 111-148, § 9008(e)(3), 124 Stat. 119, 860 (Mar. 23, 2010)
(emphasis added). Generally, Congress “acts intentionally when it uses particular language in
one section of a statute but omits it in another.” Dep’t of Homeland Sec. v. MacLean, 135 S. Ct.
913, 919 (2015) (citing Russello v. United States, 464 U.S. 16, 23 (1983)).

32

To be sure, each of these statutes varies slightly in its exact wording; some refer to drugs
“designated . . . for a rare disease or condition” while others refer to drugs “designated as an
orphan drug.” Yet, together, these provisions indicate that Congress knows how to add an
additional use- or indication-based limitation when referring to a drug that has received an
orphan designation. Cf. Dep’t of Homeland Sec. v. MacLean, 135 S. Ct. 913, 921 (2015)
(referencing other federal statutes demonstrating that Congress “knew how to distinguish
between regulations that had the force and effect of law and those that did not”); Dole Food Co.
v. Patrickson, 538 U.S. 468, 476 (2003) (finding it instructive that the statute at issue referred
only to “ownership” while “[v]arious federal statutes refer to ‘direct and indirect ownership’” as
demonstrating that “[w]here Congress intends to refer to ownership in other than the formal
sense, it knows how to do so”). Each provision contains use- or indication-limiting language,
suggesting that Congress must typically intend for the term “designated . . . for a rare disease or
condition” to have a more general meaning when used alone. That Congress by contrast used
only the general phrase “designated . . . to treat a rare condition or disease” in section 340B(e),
implies that it must have meant to refer to that designated drug in all of its uses and indications.
HHS has not pointed the Court to a single provision in the U.S. Code that appears to use
the language “designated . . . for a rare disease or condition,” alone, in the use-limiting way that
it argues section 340B(e) should be read. And HHS’s response that the comparison provisions
just discussed “are too remote in time and location to cast any illuminating light on the
congressional intent behind the language chosen for” section 340B(e) simply does not withstand
scrutiny. Defs.’ Reply at 17. These related provisions are some of the very same benefitproviding provisions with which HHS claims its own interpretation is meant to accord. See A.R.
682–83 (citing 21 U.S.C. § 379h(a)(1)(F); 26 U.S.C. § 45C) Defs.’ Mem. Sup. Summ. J. at 20–

33

21. But, far from evidencing consistency, the differing language of those related provisions
demonstrates that Congress must have had a different intent in mind when it drafted section
340B(e).15 These provisions, moreover, refute HHS’s contention that when “drugs are used for
common diseases, they are not formally categorized or considered ‘orphan-designated drugs’ and
it would be a mistake to classify them as such.” Defs.’ Reply at 12. Congress’s addition of
qualifying language indicates that it believes reference to a drug’s orphan designation, alone,
would refer to the drug, generally, irrespective of the specific use. 16
HHS is correct to note that the general statutory “incentive[s] associated with the orphandesignated drug applies only to the orphan indication, and not to non-orphan indications.” Defs.’
Mem. Support. Summ. J. at 20. But, the language of section 340B(e) does not indicate whether
the newly added entities’ inability to access orphan-designated drugs at 340B Program prices
was intended to serve as an additional benefit meant to flow to the manufacturers of those drugs,
or simply as a compromised-limitation on the reach of the newly expanded program. Indeed, the
Court takes notes that the orphan-drug exclusion pertains only to the newly added entities.
Section 340B(e) continues to allow pre-existing entities—or those enumerated in subsections (A)
through (L) plus children’s hospitals—to access orphan-designated drugs at section 340B prices

15

PhRMA also points to section 340B(e)’s heading. While “section headings are tools
available for the resolution of a doubt about the meaning of the statute,” Fla. Dep’t of Revenue v.
Piccadilly Cafeterias, Inc., 554 U.S. 33, 47 (2008) (internal quotation marks and citation
omitted), the Court does not find section 340B(e)’s heading particularly informative here. The
section’s heading refers generally to “orphan drugs.” Contrary to PhRMA’s argument, however,
other subsections in the U.S. Code similarly refer generally to an “orphan drug” without
specifying usage, even when the actual text of that provision includes a use-based limitation. See
21 U.S.C. § 379h(a)(1)(F) (“Exception for designated orphan drug or indication”).
16

The Court does agree with HHS that the statute’s cross reference to section 360bb
(regarding the designation process) rather than section 360cc (regarding the marking process) is
not conclusive. As HHS points out, “use” is not synonymous with “marketing” and drugs may
be lawfully prescribed to treat conditions for which they have not been approved for marketing.
Defs.’ Reply. at 13–14.

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even when used to treat a rare disease or condition. That result is an odd one if Congress
intended for the orphan drug exclusion to operate as an additional incentive for drug
manufacturers to develop orphan drugs, and therefore conflicts to some extent with HHS’s
characterization of section 340B(e) as intended in some way to preserve the Orphan Drug Act’s
incentives.
Neither party has identified any contemporaneous legislative history that bears on the
purpose behind, or rationale for, section 340B(e). 17 After undertaking its own review, the Court
has found none, either. HHS cites only to the general stated purpose for the 340B Program: “to
stretch scarce Federal resources as far as possible, reaching more eligible patients and providing
more comprehensive services.” See H.R. Rep. No. 102-384, pt. 2, at 12 (1992). But that
legislative history is drawn from the program’s initial passage in 1992. That far earlier
proclamation sheds little light on the specific reasoning of Congress in 2010 when it passed
section 340B(e). The Court fails to see how it persuasively supports HHS’s contention that in
2010 Congress specifically intended for “section 340B(e) to balance the interests of orphan drug
development and the expansion of the 340B Program to new entities.” A.R. 684. Moreover,
while it is beyond dispute that the 340B Program is intended to ensure access to drugs at a
reduced cost for certain entities and in certain circumstances, the acknowledgement that the

17

Both of the amicus briefs filed in this case point to a post-enactment letter from
Congressman Henry Waxman and Congressman Tom Harkin which states that “HRSA’s
interpretation of [section 340B(e)] is consistent with legislative intent.” See A.R. 335–36; see
also Brief of the American Hospital Association as Amicus Curiae at 17, ECF No. 19; Amicus
Curiae Brief of the Safety Net Hospitals for Pharmaceutical Access, et al. at 17–18, ECF No. 20.
Neither brief identifies any contemporaneous statements made to that effect while Congress was
considering the ACA, however, and such “post-enactment legislative history” is “inherently
entitled to little weight.” Cobell v. Norton, 428 F.3d 1070, 1075 (D.C. Cir. 2005). Because that
letter was written well after the ACA was enacted, the letter is unhelpful here as it “by definition
could have had no effect on the congressional vote.” Bruesewitz v. Wyeth LLC, 562 U.S. 223,
242 (2011) (internal quotation marks and citation omitted).

35

program was meant to “stretch scarce Federal resources” at a general level is of little use in
assessing the parties’ competing interpretations of the exact balance Congress ultimately settled
upon when extending the 340B Program to new entities. 18 It is worth noting that,
notwithstanding section 340B(e)’s orphan drug exclusion, by making the newly covered entities
eligible to purchase all non-orphan designated drugs at a lower cost, Congress has still placed
those entities in a better position than they were in prior to the addition of section 340B(e).
The Court readily acknowledges that the plain meaning of the broad, unqualified
language that Congress chose to employ in section 340B(e) is somewhat curious, and might be
more difficult to reconcile with the generally-stated goal of the 340B Program. 19 The Court
appreciates the views of amici explaining how many orphan-designated drugs have common
non-orphan uses and explaining why construing section 340B(e) to apply to all orphandesignated drugs, whatever their uses in a particular case, would make the 340B Program less
attractive for many newly covered entities. The Court further concedes that, “[c]ertainly, there

18

For their part, PhRMA points to Congress’s decision not to amend the language
“designated . . . for a rare disease or condition” in section 340B(e) when it amended that section
to remove children’s hospitals from the list of excluded entities. Pl.’s Mem. Opp. Summ. J. at
28; see also note 2, supra. The Court does not find Congress’s failure to act conclusive in either
direction. Congress’s refusal to act may indicate that members of Congress definitively read the
statute as the Court does and simply intended to “le[ave] the matter where it was.” Kucana v.
Holder, 558 U.S. 223, 250 (2010). But it may also infer that members of Congress, contrary to
what the text seems to indicate but in line with HHS’s reading, believed “that the existing
legislation already incorporated the offered change.” Pension Benefit Guar. Corp. v. LTV Corp.,
496 U.S. 633, 650 (1990). Given these differing interpretations of Congress’s inaction, the Court
gleans little from Congress’s failure to amend the statute.
19

At the same time—and cautioning, again, that the parties have not identified and the
Court has not found any contemporaneous legislative history directly on point—it is worth
pointing out that the 2010 ACA amendment was the first addition of new specificallyenumerated covered entities since the 340B Program’s inception in 1992. Congress may have
chosen to exclude all orphan-designated drugs from the program for those new entities in an
effort to balance the program’s significant extension to new covered entities with the impact that
extension would have on the prices that pharmaceutical manufacturers’ could charge to a large
number of newly eligible entities.

36

may be compelling policy reasons,” Hall v. United States, 132 S. Ct. 1882, 1893 (2012), for
excluding orphan-designated drugs from the section 340B pricing program only when they are
used to treat those diseases, particularly in light of Congress’s clear effort to expand the 340B
Program. “But if Congress intended that result, it did not so provide in the statute.” Id.
Congress’s chosen statutory language evidences that it struck a different balance and it is simply
“not for [this Court] to rewrite the statute.” Id. Congress remains free to amend section 340B(e)
if it determines that, in practice, the scheme it has set up is not a workable one or does not
provide the hoped-for benefits to the extent envisioned. But until Congress does so “this court is
bound by the language that Congress has so far provided.” 20 United States v. Singleton, 182 F.3d
7, 15 (D.C. Cir. 1999); see also Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559
U.S. 573, 604 (2010) (noting that “[t]o the extent Congress is persuaded that the policy concerns
identified by the dissent require a recalibration of the [statutory] scheme, it is, of course, free to
amend the statute accordingly”).

20

HHS also argues that adopting PhRMA’s reading of the statute would “create perverse
incentives” and would encourage pharmaceutical manufacturers to seek to designate their bestselling drugs as orphan drugs. Defs.’ Reply at 18–19. The Court finds this fear unfounded.
FDA regulations already specify that the agency will “refuse to grant a request for orphan-drug
designation” if “[t]here is insufficient information about the drug, or the disease or condition for
which it is intended, to establish a medically plausible basis for expecting the drug to be effective
in the prevention, diagnosis, or treatment of that disease or condition.” 21 C.F.R. § 316.25(a)(2)
(emphasis added). Nor does the administrative record appear to support some of the negative
consequences that HHS portends. As PhRMA points out, an informal survey undertaken by
several advocacy organizations representing hospitals that participate in the 340B Program
showed that only 17.2% of entities responding to the survey were “somewhat” or “very” likely to
withdraw from the 340B Program if they were unable to access orphan-designated drugs when
used to treat non-rare conditions, while 72.9% were “unlikely” to withdraw. A.R. 727.
Similarly, only 7.1% of entities that responded to the survey stated that they would not have
registered for the program if they had known they were unable to access those drugs at reduced
prices; 92.9% responded that they would have registered for the program nonetheless. Id.

37

Because the term “a drug designated . . . for a rare disease or condition” in section
340B(e), as construed with reference to related statutory provisions, unambiguously indicates
that Congress intended to exclude all drugs carrying an orphan-designation from 340B Program
eligibility for the newly added entities, the Court concludes that HHS’s Interpretive Rule is
contrary to the plain language of the statute. Accordingly, the Court grants plaintiff’s motion for
summary judgment and vacates the Interpretive Rule as “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

V. CONCLUSION
For the foregoing reasons, the defendants’ motion for summary judgment (ECF No. 14)
is DENIED, and the plaintiff’s motion for summary judgment (ECF No. 21) is GRANTED. An
order consistent with this Memorandum Opinion is separately and contemporaneously issued.
Dated: October 14, 2015

RUDOLPH CONTRERAS
United States District Judge

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