Teva Pharmaceuticals USA, Inc. v. Robert F. Kennedy, Jr.
CourtCourt of Appeals for the D.C. Circuit
Date FiledAugust 18, 2026
Docket25-5425
StatusPublished
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Full Opinion
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 5, 2026 Decided August 18, 2026
No. 25-5425
TEVA PHARMACEUTICALS USA, INC., ET AL.,
APPELLANTS
v.
ROBERT F. KENNEDY, JR., IN HIS OFFICIAL CAPACITY AS
SECRETARY OF HEALTH AND HUMAN SERVICES AND MEHMET
OZ, IN HIS OFFICIAL CAPACITY AS ADMINISTRATOR OF THE
CENTERS FOR MEDICARE & MEDICAID SERVICES,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:25-cv-00113)
Sean Marotta argued the cause for appellants. With him
on the briefs were Danielle Desaulniers Stempel, Dana A.
Raphael, and Katherine T. McKay.
Cesar Lopez-Morales, Lauren Shepard, Clement Seth
Roberts, Irena Royzman, and Andrew D. Silverman were on the
brief for amici curiae Bausch Health Companies Inc. et al. in
support of appellants.
2
Brian T. Burgess was on the brief for amicus curiae
Association for Accessible Medicines in support of appellants.
Maxwell A. Baldi, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were Eric
J. Hamilton, Deputy Assistant Attorney General, Michael S.
Raab, Attorney, and Kenneth R. Whitley, Attorney, U.S.
Department of Health and Human Services.
Nandan M. Joshi and Wendy Liu were on the brief for
amici curiae Public Citizen, et al. in support of appellees.
Maame Gyamfi, Kelly Bagby, and William Alvarado
Rivera were on the brief for amici curiae AARP, et al. in
support of appellees.
Charles Gerstein was on the brief for amicus curiae
Patients for Affordable Drugs in support of appellees.
Before: HENDERSON, CHILDS and PAN, Circuit Judges.
Opinion for the Court filed by Circuit Judge CHILDS.
CHILDS, Circuit Judge: For years, federal law kept the
Centers for Medicare & Medicaid Services (CMS) out of the
bargaining room. Medicare paid for prescription drugs, but
CMS could not negotiate their prices. The Inflation Reduction
Act of 2022 (IRA) changed that arrangement. It created the
Drug Price Negotiation Program and directed CMS to identify
certain high-spending drugs and negotiate the prices available
under Medicare. This case concerns the line CMS has drawn
between drugs brought into the Negotiation Program and those
kept out, and, more importantly, whether Congress gave CMS
authority to draw that line where it did.
3
Teva encounters those rules from both sides of the
pharmaceutical market. It sells branded medicines, including
Austedo and its extended-release formulation, Austedo XR. It
also develops generic versions of medicines sold by others.
CMS grouped Austedo and Austedo XR as one “qualifying
single source drug” because they share the same active moiety
and manufacturer, even though the FDA approved them under
separate applications. CMS also announced that it will
consider a generic as “marketed” only when the manufacturer
engages in “bona fide marketing.” Teva says both rules exceed
CMS’s statutory authority and that the Negotiation Program
deprives it of a protected property interest without due process.
The Government responds that the IRA bars courts from
reviewing Teva’s statutory claims.
We conclude that the review bar covers CMS’s
drug-specific determinations, not the generally applicable legal
standards that govern them. On the merits, we conclude that
the IRA permits CMS to treat Austedo and Austedo XR as one
statutory drug, and the Negotiation Program does not deprive
Teva of a protected property interest. Teva’s challenge to the
“bona fide” marketing requirement, however, is ripe for
review. We therefore affirm in part and reverse in part the
district court’s grant of summary judgment in favor of the
Government and remand Teva’s challenge to CMS’s “bona
fide marketing” requirement for the district court to consider in
the first instance.
I.
A.
1.
Medicare is a federally funded health-insurance program
that pays for covered medical care, including prescription
4
drugs, for people aged 65 or older and people with disabilities.
See 42 U.S.C. §§ 426, 426a, 426-1, 1395 et seq. Congress
divided the program into five “Parts.” Ne. Hosp. Corp. v.
Sebelius, 657 F.3d 1, 2 (D.C. Cir. 2011). But two concern us
here. Part B provides supplemental insurance and covers,
among other things, certain drugs administered as part of a
physician’s service or furnished for use with specified durable
medical equipment. See 42 U.S.C. §§ 1395j–1395w-6; 42
C.F.R. § 414.900(b)(1). Part D, for its part, provides
beneficiaries with prescription-drug coverage. See 42 U.S.C.
§§ 1395w-101 et seq.
Part D relies on private insurers to deliver that coverage.
Eligible beneficiaries enroll in plans offered by those insurers,
known as plan sponsors. To participate, a plan sponsor must
submit a successful bid and comply with Medicare’s
requirements. See Pharm. Care Mgmt. Ass’n v. Mulready, 78
F.4th 1183, 1188 (10th Cir. 2023); 42 U.S.C. § 1395w-111.
CMS, in turn, reimburses plan sponsors for covered Part D
expenditures under a web of contracts and regulations. See 42
U.S.C. § 1395w-112(b); 42 C.F.R. §§ 423.301 et seq.
For years, the statute kept CMS out of the bargaining
room. It prohibited the agency from “interfer[ing] with the
negotiations between drug manufacturers” and plan sponsors.
42 U.S.C. § 1395w-111(i). But costs continued to climb. By
2019, Part D spending was “projected to increase faster than
any other category of health spending.” S. Rep. No. 116-120,
at 4 (2019). Congressional reports traced much of that growth
to specialty drugs facing “little or no competition,” with “a
relatively small number of drugs” accounting for “a
disproportionately large share of Medicare costs.” H.R. Rep.
No. 116-324, pt. 2, at 37 (2019). In the Inflation Reduction Act
of 2022, Congress changed course. It created a program
through which Medicare would negotiate the prices of certain
5
high-cost drugs. See 42 U.S.C. §§ 1320f–1320f-7; 26 U.S.C.
§ 5000D.
2.
The IRA charges CMS with establishing a Drug Price
Negotiation Program and using it to “negotiate and, if
applicable, renegotiate maximum fair prices for such selected
drugs.” 42 U.S.C. § 1320f(a)(3). Congress stated the
Program’s aim plainly: to “achieve the lowest maximum fair
price for each selected drug.” Id. § 1320f-3(b)(1). That price
applies when eligible beneficiaries receive selected drugs
through Medicare Parts B and D. Id. §§ 1320f(c)(2), 1320f-
2(a)(1)–(3), 1320f-3(a).
Still, the IRA does not “pursue[] its stated purpose at all
costs.” Stanley v. City of Sanford, 606 U.S. 46, 58 (2025)
(quotation marks omitted). Congress instead prescribed rules
for the negotiations, including a requirement that a qualifying
single source drug has been approved for at least seven years.
42 U.S.C. § 1320f-1(e). Manufacturers retain a choice whether
to participate, but it is not a cost-free one. A manufacturer that
declines to negotiate must withdraw from Medicare and
Medicaid or face an excise tax on all sales of the selected drug.
See 26 U.S.C. § 5000D.
The Negotiation Program proceeds in calendar-year
cycles. See 42 U.S.C. § 1320f(b)(1)–(2). Each cycle centers
on an “initial price applicability year,” the calendar year in
which the negotiated price first applies. Id. § 1320f(b)(1). The
corresponding “price applicability period” begins on January 1
of that year and continues through the last year in which the
drug remains selected and subject to the negotiated price. Id.
§ 1320f(b)(1)–(2).
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3.
Before CMS can negotiate a drug’s price, it must decide
which drugs enter the negotiating room. Congress prescribed
a narrowing process. CMS begins with “qualifying single
source drugs,” identifies the highest-spending drugs among
them as “negotiation-eligible drugs,” and then selects a
specified number for negotiation. 42 U.S.C. § 1320f-1(a), (d)–
(e).
For a covered drug of the kind at issue here, three
conditions govern whether it qualifies as a single source drug.
First, the FDA must have approved the drug under 21 U.S.C.
§ 355(c), and the drug must be marketed under that approval;
second, at least seven years must have passed since the
approval; and third, the drug must not be the listed brand-name
drug for any generic that has been “approved and marketed”
under an abbreviated new drug application. 42 U.S.C. § 1320f-
1(e)(1)(A).
CMS next identifies the “negotiation-eligible drugs” from
that pool. Id. § 1320f-1(d)(1). For the 2026 and 2027 price
periods, those are the 50 qualifying single source drugs with
the highest total Part D expenditures during a specified
12-month period. Id. § 1320f-1(d)(1)(A). For later periods,
CMS identifies two sets: the 50 qualifying single source drugs
with the highest Part B expenditures and the 50 with the highest
Part D expenditures. Id. § 1320f-1(d)(1). Congress excluded
certain categories of drugs from both pools, but none of those
exclusions concerns us here. Id. § 1320f-1(d)(2), (e)(3).
From the resulting pool, CMS ranks the negotiation-
eligible drugs by total expenditures and, by a statutory
deadline, must “select and publish” a list of the highest-ranking
drugs. Id. § 1320f-1(a). In calculating expenditures, CMS
must aggregate the data “across dosage forms and strengths of
7
the drug.” Id. § 1320f-1(d)(3)(B); see also id. § 1320f-5(a)(2).
Every drug placed on the published list becomes a “selected
drug” and “shall be subject to the negotiation process.” Id.
§ 1320f-1(a), (c).
The number of available slots increases over time. CMS
must select 10 drugs for 2026, 15 drugs for 2027 and 2028, and
20 drugs for each year after that. Id. § 1320f-1(a)–(b). If fewer
drugs qualify for negotiation in a given period than the statute
directs CMS to select, there is no further choice to make: CMS
must select them “all.” Id. § 1320f-1(a).
4.
The IRA also restricts review at each of the three steps in
this narrowing process. It provides that “[t]here shall be no
administrative or judicial review of . . . [t]he selection of drugs
under section 1320f-1(b) of this title, the determination of
negotiation-eligible drugs under section 1320f-1(d) of this title,
and the determination of qualifying single source drugs under
section 1320f-1(e) of this title.” 42 U.S.C. § 1320f-7(2).
5.
For a manufacturer whose drug makes the list, selection
sets the next stage in motion. The manufacturer must enter into
an agreement with CMS and submit pricing and other
information by deadlines fixed in the statute. 42 U.S.C.
§§ 1320f-2(a), 1320f-3(b)(2)(A). CMS must then make “a
written initial offer” proposing a maximum fair price and
providing “a concise justification” for it. Id. § 1320f-
3(b)(2)(B). The manufacturer has thirty days to accept or
counter. Id. § 1320f-3(b)(2)(C)(i). If it counters, CMS must
respond in writing. Id. § 1320f-3(b)(2)(D). Throughout this
exchange, CMS must consider the factors Congress specified.
Id. § 1320f-3(e). And the bargaining cannot continue
8
indefinitely. For each price period, the statute fixes a date by
which negotiations “shall end.” Id. § 1320f-3(b)(2)(E).
Once the parties settle on a maximum fair price, the
manufacturer must make that price available beginning on
January 1 of the initial price applicability year. See 42 U.S.C.
§ 1320f-2(a)(1)–(3). The beneficiaries of that bargain include
eligible Medicare recipients and the pharmacies, hospitals,
physicians, and other providers that furnish them the selected
drug. Id. The negotiated price may travel further still, affecting
drug-price calculations under the 340B Drug Pricing Program
and state Medicaid programs. Id. §§ 1320f-2(d), 1396r-
8(c)(1)(C)(i)(V).
Congress attached consequences to missed deadlines. A
manufacturer that fails to enter the required agreement, or that
enters one but does not agree to a maximum fair price on time,
enters a statutory “noncompliance period.” 26 U.S.C.
§ 5000D(b). During that period, federal law imposes an excise
tax on sales of the selected drug. See id. § 5000D(a)–(b).
Once established, the maximum fair price governs during
the drug’s price applicability period. See 42 U.S.C.
§ 1320f(b)(2). The price may later be renegotiated in specified
circumstances. Id. § 1320f-3(f). Nor must a drug remain
selected forever. Ordinarily, it ceases to be a selected drug in
the first year beginning at least nine months after CMS
determines that a generic version has been “approved” and
“marketed.” Id. § 1320f-1(c)(1).
B.
Congress directed CMS to implement the Program’s
opening years through “program instruction or other forms of
program guidance.” Inflation Reduction Act of 2022, Pub. L.
No. 117-169, §§ 11001(c), 11002(c), 136 Stat. 1818, 1854,
9
1862 (codified at 42 U.S.C. §§ 1320f note, 1320f-1 note). After
soliciting public comment and revising its proposals, CMS
issued guidance for the 2026 and 2027 initial price applicability
years. See CMS, Medicare Drug Price Negotiation Program:
Revised Guidance (June 30, 2023) (2026 Guidance),
https://perma.cc/J2VZ-F5BZ; CMS, Medicare Drug Price
Negotiation Program: Final Guidance (Oct. 2, 2024) (2027
Guidance), https://perma.cc/TK33-JX9S. Teva challenges two
features of that Guidance.
1.
The first concerns what counts as one qualifying single
source drug. The IRA directs CMS, when calculating
expenditures, to use data aggregated across a drug’s dosage
forms and strengths, “including new formulations of the drug.”
42 U.S.C. § 1320f-1(d)(3)(B); see 2026 Guidance § 30.1, at
100; 2027 Guidance § 30.1, at 169. CMS says its Guidance
carries that command into the process of identifying qualifying
single source drugs. It groups together “all dosage forms and
strengths of the drug with the same active moiety and the same
holder of a New Drug Application (NDA),” even when the
products are “marketed pursuant to different NDAs.” 2026
Guidance § 30.1, at 99; 2027 Guidance § 30.1, at 167.
Simply put, separate NDAs do not necessarily mean
separate drugs. If the products share an active moiety and an
NDA holder, CMS treats them as a qualifying single source
drug. CMS deemed that approach “appropriate” because
manufacturers sometimes obtain approval for new dosage
forms or routes of administration involving the same active
moiety through different NDAs. 2027 Guidance § 30.1, at 169;
see also 2026 Guidance § 30.1, at 100.
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2.
The second provision concerns when an approved generic
“is marketed.” 42 U.S.C. § 1320f-1(e)(1)(A)(iii). That
determination carries consequences. Once an approved generic
is marketed, its brand-name counterpart no longer qualifies as
a qualifying single source drug.
In CMS’s view, a generic has not necessarily been
“marketed” simply because it has reached the market. The
Guidance instead asks whether “the totality of the
circumstances” shows that the manufacturer “is engaging in
bona fide marketing of that drug.” 2026 Guidance § 30.1, at
102; see also 2027 Guidance § 30.1, at 170. To make that
judgment, CMS considers Prescription Drug Event data
submitted by Part D plan sponsors and Average Manufacturer
Price data reported by manufacturers. See 2026 Guidance
§ 30.1, at 101–02; 2027 Guidance § 30.1, at 170–71; see also
2026 Guidance at 76 n.23; 2027 Guidance at 205 n.103.
But no single dataset controls. CMS describes the analysis
as a “holistic inquiry” that “will not necessarily turn on any one
source of data.” 2027 Guidance § 30.1, at 171; see also 2026
Guidance § 70, at 169. Other considerations may include
whether the generic remains “regularly and consistently
available for purchase” and whether licensing or other
agreements restrict its availability or distribution. 2027
Guidance § 30.1, at 171. The Guidance thus asks not merely
whether a generic has made a sale, but whether it has entered
the market in earnest.
C.
With the statutory and regulatory framework now in place,
we turn to the facts. Teva operates on both sides of the
pharmaceutical market. It manufactures branded medicines of
11
its own and develops generic versions of medicines made by
others.
Among Teva’s branded medicines are Austedo and
Austedo XR, drugs used to treat involuntary muscle
movements. Austedo XR is an extended-release formulation
of Austedo. The FDA approved the two products under
separate NDAs, but they share the same active moiety, and
Teva holds both applications. Under CMS’s grouping rule,
those features cause the products to be treated as one qualifying
single source drug. Teva has also developed generic versions
of five innovator drugs selected for the 2027 initial price
applicability year (IPAY 2027): Xtandi, Ofev, Linzess,
Xifaxan, and Otezla.
In response to CMS’s selection of Austedo, Teva sued in
the United States District Court for the District of Columbia. It
alleged that CMS had exceeded its statutory authority. In
Teva’s view, both the bona fide marketing requirement and
CMS’s definition of a qualifying single source drug constituted
agency action in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right, in violation of 5 U.S.C.
§ 706(2)(C). Because the Guidance rested on those allegedly
erroneous interpretations, Teva further contended that
implementing it would be unlawful, arbitrary, capricious, an
abuse of discretion, or contrary to law under 5 U.S.C.
§ 706(2)(A).
Teva also raised a constitutional claim, alleging that both
the IRA and CMS’s interpretation of it violated the Fifth
Amendment’s guarantee against deprivations of property
without due process of law. For relief, Teva sought vacatur of
the challenged Guidance under the APA, a declaration that
CMS’s interpretations were unlawful, and declaratory and
injunctive relief on its due process claim.
12
The Government and Teva each moved for summary
judgment. The district court granted summary judgment in
favor of the Government, denying Teva’s motion. It first held
that the IRA’s review bar did not foreclose Teva’s challenges
to the generally applicable Guidance. On the merits, however,
the district court upheld CMS’s definition of a qualifying single
source drug as consistent with the IRA. It declined to consider
Teva’s challenge to the bona fide marketing standard,
concluding that the claim was not yet ripe. And it rejected
Teva’s constitutional claim because Teva had identified no
protected property interest. Teva timely appealed.
II.
Because the district court granted summary judgment,
“[w]e have jurisdiction under 28 U.S.C. § 1291.” Capitol Hill
Grp. v. Pillsbury, Winthrop, Shaw, Pittman, LLC, 569 F.3d
485, 488 (D.C. Cir. 2009). Our review of the district court’s
grant of summary judgment is de novo. Ward v. McDonald,
762 F.3d 24, 31 (D.C. Cir. 2014). In conducting that review,
we afford “no particular deference” to the district court’s
review of an agency action under the APA. NACS v. Bd. of
Governors of Fed. Rsrv. Sys., 746 F.3d 474, 482 (D.C. Cir.
2014) (citation modified).
We consider several issues on appeal: (1) whether Teva
has standing to challenge CMS’s interpretation of “qualifying
single source drug”; (2) whether Congress barred judicial
review of Teva’s statutory challenges to the Negotiation
Program; (3) whether the district court correctly rejected
Teva’s statutory challenges to the Negotiation Program; and (4)
whether the district court correctly rejected Teva’s due process
challenge to the Negotiation Program. We address each
argument in turn.
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III.
A.
We first address the Government’s argument that Teva
lacks standing to bring its challenge against the Guidance
“identify[ing] a potential qualifying single source drug
using . . . all dosage forms and strengths of the drug with the
same active moiety and the same holder of a New Drug
Application (NDA), inclusive of products that are marketed
pursuant to different NDAs.” 2026 Guidance § 30.1, at 99;
2027 Guidance § 30.1, at 167.
To have standing, Teva “must have (1) suffered an injury
in fact, (2) that is fairly traceable to the challenged conduct of
the defendant, and (3) that is likely to be redressed by a
favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S.
330, 338 (2016). As a general rule, a plaintiff may challenge
an agency decision resting on an erroneous legal premise
although the agency “might later, in the exercise of its lawful
discretion, reach the same result for a different reason.” FEC
v. Akins, 524 U.S. 11, 25 (1998) (citation omitted). Indeed,
“those adversely affected by a discretionary agency decision
generally have standing to complain that the agency based its
decision upon an improper legal ground.” Id. More still, when
a rule regulates the plaintiff, “there is ordinarily little question”
that those requirements are met. Lujan v. Defs. of Wildlife, 504
U.S. 555, 561–62 (1992). The parties’ dispute concerns
redressability alone. The Government accepts that the
Guidance governs the selection of Austedo and regulates Teva.
According to the Government, “[t]o the extent Teva seeks only
prospective vacatur of CMS’s guidance,” that relief would not
remedy any injury arising from the selection of Austedo.
Appellee’s Br. 32 n.5.
14
At first blush, that argument has a certain logic. Teva
cannot ask us to overturn the selection of Austedo because
Congress barred review of that determination. But if Teva
urges us only to vacate the legal standard CMS used, the
Government says, Austedo remains selected and Teva gains
nothing. So from that premise, one form of relief is forbidden
and the other is futile. The Government attempts to construct
a jurisdictional vise: Seek relief that overturns the selection of
Austedo, and the review bar forecloses suit; seek anything less,
and Article III does.
We have heard a similar argument before. In American
Clinical Laboratory Ass’n v. Azar (ACLA), Congress had
barred review of “the establishment of payment amounts”
under Medicare. 931 F.3d 1195, 1199 (D.C. Cir. 2019). The
association challenged an antecedent data-collection rule that
allegedly drove the unreviewable payment amounts downward.
See id. at 1201–03. The Secretary responded that because
Congress had insulated the payment amounts from review,
those amounts could not supply a redressable injury. See id. at
1204.
We rejected that argument because it “conflate[d] two
issues.” Id. True, the association could not “challenge the rates
themselves under the statute’s jurisdiction-stripping
provision.” Id. But that did not mean the rates could not “be
the source of ACLA’s members’ injury in a challenge to the
data-collection rule.” Id. The relevant question was whether
the reviewable rule was “sufficiently linked” to the injury
produced by the unreviewable payment amounts. Id. It was.
Requiring the Secretary to collect the data the statute demanded
and use that data to calculate a new weighted median
“appear[ed] sufficiently likely to increase Medicare
reimbursement rates to establish redressability.” Id.
15
The same is true here. CMS continues to rely on the
Guidance to treat Austedo and Austedo XR as one statutory
drug, and Austedo’s negotiated maximum fair price has yet to
take effect. Prospective vacatur would remove the legal rule
governing that ongoing treatment and require CMS to proceed
under the proper statutory construction. That is enough to
establish redressability. See id. at 1204. The possibility that
CMS might reach the same result on remand does not change
that analysis. See Akins, 524 U.S. at 25.
Moreover, the Government’s authorities do not support a
different result. In Dobbin Plantersville Water Supply Corp. v.
Lake, the state commission had completed the challenged
decertification, had nothing left to enforce, and need not
authorize the competing utilities before they began service.
108 F.4th 320, 326 (5th Cir. 2024). An injunction against
future enforcement therefore would have been “pointless.” Id.
And Steel Co. v. Citizens for a Better Environment involved no
continuing or imminent violation that prospective relief could
prevent. See 523 U.S. 83, 108 (1998). The Court explained
that such relief could have redressed the plaintiff’s injury had
an ongoing or threatened violation been alleged. See id.
For those reasons, Teva has standing to bring its challenge
against the Guidance “identify[ing] a potential qualifying
single source drug using . . . all dosage forms and strengths of
the drug with the same active moiety and the same holder of a
New Drug Application (NDA), inclusive of products that are
marketed pursuant to different NDAs,” 2026 Guidance § 30.1,
at 99; 2027 Guidance § 30.1, at 167.
B.
With standing resolved, we turn to the Government’s
contention that 42 U.S.C. § 1320f-7(2) bars Teva’s statutory
challenges. Neither the provision’s text nor the IRA’s structure
16
bears the weight the Government places on it. We therefore
reject its reading of the review bar.
Congress, of course, controls the “subject-matter
jurisdiction” of the lower federal courts. Kontrick v. Ryan, 540
U.S. 443, 452 (2004). But Congress controls it not CMS. An
agency cannot expand a review bar simply by declaring its own
conduct unreviewable.
That division of authority reflects a rule with longstanding
pedigree. A court must “independently determine for itself
whether the agency’s interpretation of a statute is correct.”
McLaughlin Chiropractic Assocs., Inc. v. McKesson Corp.,
606 U.S. 146, 155 (2025). The rule does not vanish when
Congress “delegates discretionary authority” to the Executive
Branch. Trump v. Cook, No. 25A312, 2026 WL 1855613, at
*7 (U.S. June 29, 2026) (quotation marks omitted). Put plainly,
agencies administer statutes, but courts determine what those
statutes mean. We are not bound by CMS’s interpretation
because “Congress expects courts to handle technical statutory
questions.” Loper Bright Enters. v. Raimondo, 603 U.S. 369,
402 (2024). Nor does the complexity of the Medicare program
alter our duty. After all, a “mass of technical detail” is “the
ordinary diet of the law.” Egelhoff v. Egelhoff, 532 U.S. 141,
161 (2001) (Breyer, J., dissenting).
These principles yield a familiar starting point in the
“strong presumption favoring judicial review of administrative
action.” Salinas v. U.S. R.R. Ret. Bd., 141 S. Ct. 691, 698
(2021) (quotation marks omitted). That rule is “well-settled,”
so we presume Congress legislates with it “in mind.” Id.
(quotation marks omitted). To overcome that presumption, the
Government must produce “clear and convincing evidence”
that Congress intended to preclude review of the particular
agency action challenged. Amgen, Inc. v. Smith, 357 F.3d 103,
17
111 (D.C. Cir. 2004) (quoting Abbott Lab’ys v. Gardner, 387
U.S. 136, 141 (1967)). Even when Congress “expressly
prohibits judicial review,” we construe that prohibition
“narrowly.” El Paso Nat. Gas Co. v. United States, 632 F.3d
1272, 1276 (D.C. Cir. 2011).
And the presumption is “particularly strong” when a party
contends, as Teva does here, that an agency has acted “in
excess of delegated authority.” Amgen, 357 F.3d at 111. The
reason is practical as well as doctrinal. If agencies could decide
for themselves whether their actions fall within a review bar,
they could enlarge their own authority merely by relabeling
what they had done. See id. at 113. Congress rarely builds
such a one-way ratchet into a statute. Put differently, “the
jurisdiction-stripping provision does not apply” if the agency’s
action fails to qualify as the kind of action for which review is
barred. Sw. Airlines Co. v. TSA, 554 F.3d 1065, 1071 (D.C.
Cir. 2009).
Determining a review bar’s reach requires attention to the
whole statutory setting. “Whether and to what extent a
particular statute precludes judicial review is determined not
only from its express language, but also from the structure of
the statutory scheme, its objectives, its legislative history, and
the nature of the administrative action involved.” ACLA, 931
F.3d at 1204 (quoting Block v. Cmty. Nutrition Inst., 467 U.S.
340, 345 (1984)). Any genuine ambiguity cuts in favor of
judicial review. “[W]hen a statutory provision is reasonably
susceptible to divergent interpretation, we adopt the reading
that accords with” the traditional and basic principle that
“executive determinations generally are subject to judicial
review.” Guerrero-Lasprilla v. Barr, 589 U.S. 221, 229 (2020)
(internal quotation marks omitted). With those rules in hand,
we look to the text of 42 U.S.C. § 1320f-7(2) and the structure
18
of the IRA to determine whether it precludes Teva’s statutory
challenges to CMS’s statutory interpretation.
C.
In determining the meaning of a statutory provision, we
start with “the text of the statute.” Van Buren v. United States,
593 U.S. 374, 381 (2021). In doing so, we give the words “their
ordinary meaning.” Artis v. District of Columbia, 583 U.S. 71,
83 (2018) (quotation marks omitted). And we “give effect, if
possible, to every clause and word of a statute.” Parker
Drilling Mgmt. Servs., Ltd. v. Newton, 587 U.S. 601, 611
(2019) (quotation marks omitted). We read those words “in
their context and with a view to their place in the overall
statutory scheme.” Roberts v. Sea-Land Servs., Inc., 566 U.S.
93, 101 (2012) (quoting Davis v. Mich. Dep’t of Treasury, 489
U.S. 803, 809 (1989)). Accordingly, we construe 42 U.S.C.
§ 1320f-7(2) as precluding review of CMS’s drug-specific
determinations while leaving its interpretation of the relevant
IRA provisions reviewable.
For starters, § 1320f-7(2) provides that “[t]here shall be no
administrative or judicial review of . . . the determination of
qualifying single source drugs under section 1320f-1(e) of this
title,” or “the determination of negotiation-eligible drugs.” 42
U.S.C. § 1320f-7(2). Based on this text, the object of the
review bar, in each instance, is “the determination.” That term
describes a single, discrete act rather than “a group of decisions
or a practice or procedure employed in making decisions.” See
McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 492 (1991)
(similarly construing “a determination” to describe a single act
covered by the review bar while leaving challenges to the
agency’s generally applicable practices and policies
reviewable).
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Basic grammar supports that understanding. A definite
article paired with a singular noun, as here, ordinarily identifies
a discrete thing—not “an ongoing endeavor.” Niz-Chavez v.
Garland, 593 U.S. 155, 166 (2021); see also Gates & Fox Co.
v. OSHRC, 790 F.2d 154, 156 (D.C. Cir. 1986) (explaining that
“the definite article” suggests that some specific thing is
referred to, rather than merely that thing in general); The
Chicago Manual of Style § 5.75 (18th ed. 2024) (“A definite
article points to a definite object.”).
And the text of subsection (e) provides context. That
subsection provides that “[f]or purposes of this part, the term
‘qualifying single source drug’ means” a drug satisfying
specified criteria. 42 U.S.C. § 1320f-1(e)(1). One of the
criteria requires that the “qualifying single source drug” be a
“covered part D drug (as defined in [42 U.S.C. §] 1395w-
102(e)).” Id. Congress hence supplied the definition of
“qualifying single source drug” and tasked CMS with deciding
whether a particular drug satisfies its definition. Making the
required drug-specific “determination” and interpreting the
IRA are distinct tasks.
CMS cannot collapse those tasks by embedding its
interpretation of the relevant term into each drug evaluation
and then calling the whole package a “determination.” Were
that enough, CMS could shield even an interpretation
exceeding its delegated authority simply by using it to make an
unreviewable decision. Suppose subsection (e) requires that a
qualifying single source drug be approved for at least seven
years, but CMS decides that five will do. Once CMS applies
that interpretation to a five-year-old drug, the Government’s
theory would place its interpretation beyond review because it
now forms part of an unreviewable determination. A neat trick,
but not one Congress authorized. CMS could rewrite the
statute and then shield its rewrite merely by applying it. The
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review bar would no longer constrain the agency’s discretion;
the agency would control the review bar. Its scope would then
turn on the agency’s label for its own conduct.
To be sure, the Supreme Court in Mullin v. Doe, 146 S. Ct.
2121 (2026) recently explained that “determination” “may be
used as a synonym for ‘decision’” or “may also be used to
describe the chain of events leading up to a decision.” Id. at
2133 (collecting sources). Although it is “common to use the
term ‘determination’ in this broad sense,” context decides
which sense the term bears. See id.; see also Pulsifer v. United
States, 601 U.S. 124, 133 (2024) (explaining that courts must
read “text in context”).
Unlike the one in this case, the review bar in Mullin swept
broadly. The statute barred review of “any determination”
made “with respect to” the designation, extension, or
termination of temporary protected status. 146 S. Ct. at 2136.
The phrase “with respect to” “generally has a broadening
effect, ensuring that the scope of a provision covers not only its
subject but also matters relating to that subject.” Patel v.
Garland, 596 U.S. 328, 339 (2022) (internal quotation marks
omitted) (treating “regarding” and “with respect to” as
synonymous). And in Mullin, the word “determination” was
modified by “any.” Mullin, 146 S. Ct. at 2133. The Supreme
Court has “repeatedly explained” that word “has an expansive
meaning.” Patel, 596 U.S. at 338. Together, those textual
signals brought the entire decisional process within the ambit
of the review bar.
In enacting the IRA, however, Congress barred review not
of “any determination” made “with respect to” the negotiation
program, but of “the determination” specified in each
subsection. See 42 U.S.C. § 1320f-7(2) (emphasis added).
That difference is consequential under Mullin itself. The Court
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there distinguished McNary because the narrower language in
that case referred to “a single act” and emphasized that the
result “turned on the specific wording of the provision at
issue.” Mullin, 146 S. Ct. at 2134. So too here. The definite
article identifies a particular determination, and the words that
follow identify its object: whether specified drugs qualify
under subsection (e). Here, Congress also did not bar review
of every decision “with respect to” those determinations.
What’s more, Teva’s APA claims also differ from those in
Mullin. There, the respondents challenged how adequately the
Secretary had “consulted the State Department about
conditions in Syria.” Mullin, 146 S. Ct. at 2134. As the Court
understood the claims, they attacked a series of procedural
choices: the Secretary communicated with the State
Department “by email,” sent a “terse and unspecific email,”
and terminated Syria’s temporary protected status designation
after receiving a “laconic answer.” Id. Those objections went
to the Secretary’s exercise of discretion. They concerned “the
quality of the [agency’s] reasoning rather than the scope of its
authority.” Ardelyx, Inc. v. Kennedy, 179 F.4th 947, 963 (D.C.
Cir. 2026) (holding that the court lacked jurisdiction to review
an arbitrary-and-capricious claim when a review bar applied).
Teva, by contrast, challenges CMS’s generally applicable
interpretation of the IRA announced in its Guidance rather than
any particular drug-specific determination. Its claim therefore
concerns the scope of CMS’s statutory authority, not the
quality of the reasoning underlying any such determination.
For those reasons, we reject the Government’s reading of
§ 1320f-7(2).
D.
The Government raises several arguments resisting our
review of CMS’s statutory interpretation, but none are sound.
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1.
The Government sees things differently. As it explains,
CMS “determines the list of qualifying single source drugs by
applying the statutory definition” of that term. Appellee’s Br.
28. And because “CMS has no discretion over which drugs it
determines are qualifying,” “[d]etermining the drugs” simply
means “generating the list of drugs that meet the definition.”
Id. From that premise, the Government concludes that Teva’s
challenge to CMS’s interpretation is “inextricably intertwined”
with the resulting drug determinations and therefore
unreviewable. But that reasoning moves too quickly. Of
course CMS must interpret the statutory definition before
applying it. It does not follow that the interpretation and the
resulting determination are the same act. As mentioned above,
an agency cannot make its statutory interpretation
unreviewable simply by using it in an unreviewable
determination.
And the Government’s cases do not carry that argument.
Each involved an agency action within a task Congress has
entrusted to the agency. The claims in those cases accordingly
concerned “the quality of the [agency’s] reasoning rather than
the scope of its authority.” Ardelyx, 179 F.4th at 963.
Start with Texas Alliance for Home Care Services v.
Sebelius, 681 F.3d 402 (D.C. Cir. 2012). Congress directed the
Secretary to formulate financial standards for bidders and
barred review of both contract awards and “the bidding
structure.” See id. at 405, 409–11. The standards appeared in
every request for bids, dictated what bidders had to submit, and
determined which bidders were eligible for a contract. See id.
at 410–11. We therefore held that they were “integral to” and
“inextricably intertwined with the bidding structure.” Id. at
411. Here, by contrast, Congress itself defined “qualifying
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single source drug.” 42 U.S.C. § 1320f-1(e)(1). Teva asks
whether CMS’s rule grouping those drugs fits within the
definition that Congress supplied.
Florida Health Sciences Center, Inc. v. Secretary of
Health & Human Services, 830 F.3d 515 (D.C. Cir. 2016), and
DCH Regional Medical Center v. Azar (DCH), 925 F.3d 503
(D.C. Cir. 2019), fit the same mold. Florida Health concerned
the Secretary’s choice between March and April data in
calculating an estimate that all agreed was unreviewable. See
830 F.3d at 517–18, 521. The claim thus invited “case-by-case
review of the reasonableness or procedural propriety” of that
choice and disclosed no “patent violation” of statutory
authority. Id. at 522 (quoting Amgen, 357 F.3d