Health Law Daily Court irons out BOTOX® wrinkle, sales price reporting required
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Monday, April 4, 2016

Court irons out BOTOX® wrinkle, sales price reporting required

By Kayla R. Bryant, J.D.

Allergan, Inc., the manufacturer of onabotulinumtoxinA, (BOTOX® and BOTOX Cosmetic®) must report to HHS all sales of both products as one biologic. The U.S. District Court for the District of Columbia found that HHS was not acting in an arbitrary and capricious manner applying the average sale price (ASP) reporting requirements of the Medicare Modernization Act (MMA) (P.L. 108-173) to BOTOX Cosmetic, even though this product is not covered by Medicare (Allergan, Inc. v. Burwell, March 30, 2016, Leon R.).

Reporting. In order to avoid overcharging of drugs due to price discrimination, drug manufacturers that participate in Medicare must report an ASP for any drug paid under Medicare by the drug’s National Drug Code (NDC). HHS uses this data to calculate a volume-weighted sales price, which Medicare reimburses at a rate of 106 percent.

BOTOX. BOTOX was approved for marketing for various “therapeutic uses” in 1989, while BOTOX Cosmetic was approved for marketing for wrinkle treatment in 2002. As required, Allergan reported its ASP data for BOTOX in 2004, but not the data for BOTOX Cosmetic. CMS requested the missing data, and upon Allergan’s objection, the agency agreed that BOTOX Cosmetic was not governed by ASP reporting requirements. CMS reversed its position again in a response to a comment presented in its regulatory rulemaking, stating that there was not an exclusion for NDCs labeled for noncovered use.

Exclusion from ASP data reporting requirements. Allergan contends that HHS acted contrary to Soc. Sec. Act. (SSA) Section 1927 in requiring it to report ASP data for BOTOX Cosmetic. The company argued that the SSA only allows HHS to collect data for drugs covered by Medicare. After finding that the statute did not have clear congressional intent, the court addressed whether HHS’ interpretation of the statute was a “permissible construction.” The district court held that Allergan must report the sales of BOTOX and BOTOX Cosmetic as one biological product, as they contained the same active ingredient. It found that the SSA barred reimbursement for procedures that are cosmetic, not the use of NDCs that are approved for cosmetic uses. The court granted HHS’ motion for summary judgment.

The case is Civil Case No. 13-00264 (RJL).

Attorneys: Joshua David Rogaczewski (McDermott Will & Emery) for Allergan, Inc. Steven A. Myers, U.S. Department of Justice, for Sylvia M. Burwell.

Companies: Allergan, Inc.

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