Ipsen Pharmaceuticals corresponded with the Centers for Medicaid Services (“CMS”) to determine the appropriate “base date” for a pharmaceutical under a self-reporting scheme that’s part of the Medicaid drug-rebate program. The base date impacts rebate calculation. Ipsen and CMS staff disagreed about the legally appropriate base date, ultimately prompting a letter from CMS’s Director of the Division of Pharmacy stating CMS’s position on the appropriate base date. The letter expressly asserted that it was not a final agency action or determination. However, Ipsen had no further avenue for review of CMS’s position, and, if it did not use CMS’s base date and CMS brought an enforcement action, the company faced a risk that it would face higher penalties for a “knowing” violation. Ipsen challenged CMS’s decision in the U.S. District Court for the District of Colombia, but that court held the Director’s letter was not final agency action and granted summary judgment for CMS.
On appeal, the Chamber supported Ipsen’s arguments that an agency action is final where there is no avenue for further review and a company faces enforcement for not following the agency’s determination. The U.S. Court of Appeals for the D.C. Circuit agreed. It reversed and remanded the district court’s decision and clarified that a federal agency’s decision expressed in a letter can constitute reviewable final agency action where there is no further avenue for administrative review and the letter creates a “legal consequence,” which includes increased risk.