Background
In 2008, Congress enacted the Medicare Improvements for Patients and Providers Act (MIPPA) directing the Secretary of Health and Human Services to implement a bundled payment system for renal dialysis services. This system replaced separate reimbursement with a single payment covering all dialysis-related items and services. In 2010, the CMS defined “renal dialysis services” to include drugs with “only an oral form” furnished for end-stage renal disease (ESRD) treatment, with implementation delayed multiple times until January 1, 2025.
Ardelyx manufactures XPHOZAH, an oral-only drug treating hyperphosphatemia (high blood phosphate levels) in ESRD patients on dialysis. The drug received FDA approval in October 2023 and was initially covered under Medicare Part D with separate reimbursement. On May 13, 2024, the CMS notified Ardelyx that XPHOZAH would be included in the bundled payment system effective January 1, 2025.
Ardelyx, joined by a patient advocacy organization and research group, sued challenging both the CMS regulation defining oral-only drugs as renal dialysis services and the specific identification of XPHOZAH as included in the bundle. The district court dismissed for lack of jurisdiction, finding the judicial review bar in 42 U.S.C. § 1395rr(b)(14)(G) applied. Ardelyx appealed.
The Court’s Holding
The D.C. Circuit affirmed the dismissal. The court held that while § 1395rr(b)(14)(G) bars judicial review of “identification[s] of renal dialysis services,” courts must first determine whether the CMS acted within its statutory authority. The judicial review bar shields only those identifications that fall within Congress’s delegation to the agency. Ardelyx’s assertion that the CMS was exceeding its authority thus required the court to examine the statutory definition.
On the merits of statutory interpretation, the court rejected Ardelyx’s argument that “renal dialysis services” excludes oral-only drugs. The statutory definition in § 1395rr(b)(14)(B) includes “other drugs and biologicals…for the treatment of end stage renal disease” and “for which payment was (before the application of this paragraph) made separately under this subchapter.” Oral-only drugs qualify on both counts: they treat ESRD and were previously reimbursed separately under Medicare Part D. The court rejected Ardelyx’s argument that the phrase “any oral equivalent form” implies Congress intended to exclude oral-only drugs from the preceding clause, noting Congress knows how to exclude categories (it explicitly excluded vaccines) and specify routes of administration.
The court also rejected Ardelyx’s contention that “treatment” requires administration during actual dialysis sessions, finding the statute refers broadly to drugs furnished “for the treatment of” ESRD without geographic or temporal limitations. In the medical context, treatment encompasses drugs that ameliorate or slow progression of the condition even when administered outside dialysis facilities.
Key Takeaways
- Judicial review of CMS drug identifications is barred only when the identification falls within the CMS’s delegated authority; the agency cannot invoke the no-review provision to shield unauthorized actions.
- Congress’s bundled payment system for ESRD was designed as comprehensive, expressly incorporating oral-only drugs that were previously reimbursed separately under Medicare Part D.
- Plain statutory language cannot be narrowed by implication; the inclusion of “oral equivalent forms” does not exclude oral-only drugs from the preceding general category of “drugs and biologicals.”
- Medications treating ESRD are “renal dialysis services” regardless of where or when administered, not limited to drugs given during dialysis sessions.
Why It Matters
This decision confirms Congress’s intent that Medicare’s shift to bundled ESRD payment was comprehensive and forward-looking, encompassing newer oral medication options alongside traditional dialysis-related services. The ruling significantly limits pharmaceutical manufacturers’ ability to challenge CMS drug classifications, as the statutory interpretation is now settled and the no-review bar prevents further APA challenges to individual drug identifications.
For the broader ESRD treatment landscape, the decision means pharmaceutical developers must account for bundled reimbursement rates when developing new oral therapies for kidney disease. The case also illustrates the judicial deference to statutory no-review provisions once an agency demonstrates it acted within delegated authority—a principle with implications across Medicare and other federal benefit programs where Congress has similarly limited judicial oversight.