Mallinckrodt Appeal Response To Response Dated 06.08.20

USCA Case #20-5154 Document #1846176 Filed: 06/08/2020 Page 1 of 16
ORAL ARGUMENT NOT YET SCHEDULED

No. 20-5154
IN THE
United States Court of Appeals

for the District of Columbia Circuit
MALLINCKRODT ARD LLC,
Plaintiff-Appellant,
v.
SEEMA VERMA, in her official capacity as ADMINISTRATOR, CENTERS

FOR MEDICARE & MEDICAID SERVICES, and
ALEX M. AZAR II, in his official capacity as SECRETARY, UNITED STATES
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Defendants-Appellees,
On Appeal from the United States District Court

for the District of Columbia
No. 19-cv-1471, District Judge Thomas F. Hogan
REPLY IN SUPPORT OF MOTION FOR INJUNCTION PENDING

APPEAL AND TO EXPEDITE BRIEFING AND ARGUMENT
CATHERINE E. STETSON
SUSAN M. COOK
KYLE M. DRUDING
HOGAN LOVELLS US LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5491
cate.stetson@hoganlovells.com
Counsel for Mallinckrodt ARD LLC

June 8, 2020
(Page 1 of Total)
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ...............................................................................ii
INTRODUCTION ...............................................................................................1
I. MALLINCKRODT PRESENTS A SUBSTANTIAL

CHALLENGE TO THE DISTRICT COURT’S DECISION AND
IS LIKELY TO SUCCEED ON THE MERITS. ........................................3
A. The Government Declines To Defend The District Court’s

Standard .....................................................................................................3
B. Government Counsel’s Current Explanation Was Never Given

By The Agency And Is Contradicted By The Record .................................4
C. The Government Fails To Engage Mallinckrodt’s Regulation-

Based, Retroactivity, and Fair Notice Arguments ......................................7
II. THE REMAINING FACTORS SUPPORT AN INJUNCTION .................8
CONCLUSION ...................................................................................................11
CERTIFICATE OF COMPLIANCE
CERTIFICATE OF SERVICE
*
Authorities upon which we chiefly rely are marked with an asterisk.
i
(Page 2 of Total)
TABLE OF AUTHORITIES
Page(s)
Cases:
Doran v. Salem Inn, Inc.,
422 U.S. 922 (1975) ...........................................................................................8
Ramaprakash v. FAA,
346 F.3d 1121 (D.C. Cir. 2003) .........................................................................7
SEC v. Chenery Corp.,

318 U.S. 80 (1943) .............................................................................................5
Statutes:
* 42 U.S.C. § 1396r-8(k)(7)(iv) .................................................................................3
*
Authorities upon which we chiefly rely are marked with an asterisk.
ii
(Page 3 of Total)
INTRODUCTION
The Government’s opposition is remarkable twice over.
First, the Government declines to defend the District Court’s novel
interpretation of the Medicaid Drug Rebate statute. Both parties thus agree that the
District Court misconstrued the key statutory provision at issue on appeal. Instead,
the Government argues that the New Drug Application (NDA) approved by FDA
in 2010 was some less-favored type of NDA that did not warrant conferring a new
base date average manufacturer price (AMP) on Mallinckrodt’s drug Acthar. But
the governing statute does not distinguish between types of NDAs. What matters
is whether the relevant application is “a new drug application,” which Acthar’s
was.
Second, Government counsel asserts that CMS’s express statements in 2012
that Acthar was entitled to a revised base date AMP were “predicated on a
misunderstanding of the critical facts.” Opp. 3. But CMS never said it was
factually mistaken. Nor could such a “misunderstanding of the critical facts” be
squared with CMS’s own statements in the administrative record, or with the
information Questcor submitted to CMS in 2012.
In 6 days, barring an injunction from this Court, CMS will lock Mallinckrodt
out of the Drug Database Reporting (DDR) system unless Mallinckrodt agrees to
incur $640 million in retroactive rebates. Either option would have a drastic
1
(Page 4 of Total)
impact upon both the company’s existing financial obligations and its efforts to
settle other litigation, and put the company on a path to bankruptcy. To make
matters worse, CMS issued new guidance last Friday asserting that the agency
itself may also “(1) [c]orrect the misclassification on behalf of the manufacturer”
or “(2) [s]uspend the misclassified drug and the drug’s status as a covered
outpatient drug under the manufacturer’s rebate agreement, and exclude the
misclassified drug from Federal financial participation,” triggering consequences
like those previously identified.1 These additional measures thus permit CMS to
do on Mallinckrodt’s “behalf” what was previously incumbent on Mallinckrodt,
further exacerbating Mallinckrodt’s impending harm.
So that Mallinckrodt may be heard on the merits, this Court should maintain
the status quo during the appeal by ordering CMS to refrain from locking
Mallinckrodt out of the DDR system. In light of Friday’s CMS guidance,
Mallinckrodt also asks that CMS be enjoined from taking any action itself that
would have the effect of forcing Mallinckrodt to update its base date AMP pending
appeal. The Court should also order expedited briefing and argument.
1
See Medicaid Drug Rebate Program Notice, Release No. 113, available at
https://www.medicaid.gov/prescription-drugs/downloads/mfr-rel-113.pdf.
2
(Page 5 of Total)
I. MALLINCKRODT PRESENTS A SUBSTANTIAL CHALLENGE TO

THE DISTRICT COURT’S DECISION AND IS LIKELY TO
SUCCEED ON THE MERITS.
A. The Government Declines To Defend The District Court’s Standard.
As Mallinckrodt explained in its motion, the relevant question of statutory
interpretation here is straightforward: If Acthar is a distinct “single source drug”—
that is, “a covered outpatient drug . . . produced or distributed under a [NDA]
approved by the [FDA]”—then it is entitled to a distinct base date AMP. 42 U.S.C.
§ 1396r-8(k)(7)(iv). FDA approved Acthar for the Infantile Spasms (IS) indication
under NDA 022432 in 2010. Based on the plain language of the statute, Acthar is
a distinct “single source drug” entitled to a distinct base date AMP. Mot. 9–15.
The Government disagrees—but not on the basis adopted by the District
Court. Indeed, it quietly acknowledges that each “single source drug” is entitled to
its own base date AMP. Opp. 11–14.
Instead, the Government reverts to an argument it made on summary
judgment below: Because Acthar was approved in 2010 under a “Type 6 NDA,” it
was not “produced or distributed” under that NDA number. Opp. 12–13 (citing
A66), 14. But there is no special carve-out for “Type 6 NDAs” in the statute. And
in its 2012 letters endorsing the new base date AMP, CMS specifically asserted—
twice—that what matters is whether Acthar was “approved” under a new NDA in
2010, full stop. A289 (“the base date AMP is calculated based on the new drug
3
(Page 6 of Total)
application which is approved by the FDA”); A236 (“because Acthar was
approved under a new NDA, Questcor may set a new base date AMP”). It was.
Moreover, as Mallinckrodt will explain in its merits briefing, Acthar was also
“produced or distributed” under NDA 022432; one need look no further than to
FDA’s 2011 letter acknowledging orphan exclusivity for the product, which was
tied to NDA 022432. A319.
B. Government Counsel’s Current Explanation Was Never Given By The

Agency And Is Contradicted By The Record.
CMS in 2012 twice “agree[d] that Acthar is eligible for a new base date
AMP” because it was “approved under a new NDA,” A289, A236. To try to
square CMS’s original position with its later about-face, the Government now
argues that the agency’s earlier “advice was predicated on a misunderstanding of
the critical facts.” Opp. 3–4. Specifically, the Government asserts that the
agency’s years-long “misunderstanding” was a result of the fact that “CMS did not
appreciate that Acthar remained completely unchanged,” and that the new NDA
number was, in its view, “merely an administrative tracking number.” Opp. 15.
That argument echoes the District Court’s inference from the record regarding
CMS’s apparently “erroneous assumptions.” See A40.
Yet the notion of the agency’s initial position being the result of “a
misunderstanding of the critical facts”—that is, a mistake of fact—is one that CMS
itself has never advanced when trying to explain its shifting positions. The
4
(Page 7 of Total)
Government cannot in litigation briefing backfill the agency’s stated rationale in
the record with that supposed factual mistake. See SEC v. Chenery Corp., 318 U.S.
80, 87 (1943) (“The grounds upon which an administrative order must be judged
are those upon which the record discloses that its action was based.”). That alone
sinks the Government’s revisionist theory.
The record also belies any argument that the agency’s flip-flop stems from a
factual mistake rather than a change in policy. During the off-and-on
communications it sent to Mallinckrodt starting in 2016, CMS offered a wide-
ranging set of explanations for equivocating on its 2012 decision: the wrong NDA
number appeared in the On-Line Label Repository; Acthar was a “purchased
product”; Achtar was “marketed” under NDA 008372; and Acthar is being
“produced or distributed” under 008372. A231, A213, A161, A93. Not once,
however, did CMS ever claim that in 2012 it was unaware of Type 6 NDAs or
“misunderstood” their import.
In any event, Questcor expressly told CMS in 2012 that (1) the 2010 FDA
approval involved a new indication, not a new dosage form or strength; and (2) that
“FDA has informed Questcor that the agency intends to revise its record so that the
approval for infantile spasms is reflected as part of the product’s original NDA, No.
08-372.” A293–294 & n.4. CMS had in front of it everything it needed to apply
5
(Page 8 of Total)
its purported statutory test, and it still determined that Acthar was eligible for a
new base date AMP. Twice.
Even if that were not so, it simply cannot be that the burden was on Questcor
to educate CMS, FDA’s sister agency at HHS, on the specific workings of FDA’s
drug approval process. Opp. 12–13. To the extent CMS believed that the
particular type of NDA at issue was material, as appellate counsel now assert, it
would have been incumbent on CMS to seek further clarification from its sister
agency.2 It is not incumbent on regulated entities to divine the unwritten policy the
agency might wish to apply—and then guess at which regulatory facts might be
relevant to the agency’s unspoken inquiry.
The Government argues that CMS’s “core contention” has remained
consistent since 2016. Opp. 16. That is not right. CMS consistently raised
questions about the base date AMP it had expressly approved in 2012. It has not
consistently explained itself. And even if it were true that CMS’s “core contention”
remained the same over the months and years of its back-and-forth with
Mallinckrodt, it would not be enough. Agencies may change their minds, but they
must explain themselves when they do so. That requires, in part, acknowledging
2
Indeed, CMS did precisely that in 2015, when it asked FDA if the listing for
Acthar was “going to be updated to reflect that the drug is marketed under NDA
008372,” and FDA responded that the “policy on how to list these Type 6
approvals is still being deliberated and a decision has not been made.” SA1–2.
6
(Page 9 of Total)
the change in position and providing an explanation for it. To date, CMS has
failed to offer an adequate explanation—let alone a consistent one—for its change
of position. Its reversal was and remains unlawful. See Ramaprakash v. FAA, 346
F.3d 1121, 1124–25 (D.C. Cir. 2003).
C. The Government Fails To Engage Mallinckrodt’s Regulation-Based,

Retroactivity, and Fair Notice Arguments.
Mirroring the District Court’s approach, the Government declines to
separately address Mallinckrodt’s regulation-based, retroactivity, and fair-notice
arguments on the ground that the “statute’s clear and unambiguous language
controls.” Opp. 17. But as discussed above, the Government is not even endorsing
the supposedly “clear and unambiguous” standard set out by the District Court.
Nor does the Government ever explain how a regulated entity such as Mallinckrodt
would have been able to divine CMS’s evolving position. See Mot. 18–19; A344
(publicly taking the position in Ipsen, consistent with Mallinckrodt’s position here,
that a distinct base date AMP is warranted after “FDA approval of a separate NDA
with a different six-digit NDA number”). For the reasons previously stated,
Mallinckrodt is thus likely to succeed on its regulation-focused, fair-notice, and
retroactivity theories as well.
7
(Page 10 of Total)
II. THE REMAINING FACTORS SUPPORT AN INJUNCTION.
Absent injunctive relief, Mallinckrodt faces the immediate and irreparable
threat of bankruptcy. See Doran v. Salem Inn, Inc., 422 U.S. 922, 932 (1975)
(holding that the threat of bankruptcy “sufficiently meets the standards for granting
interim relief, for otherwise a favorable final judgment might well be useless”).
Mallinckrodt’s Chief Financial Officer has explained that being locked out of the
DDR system is simply not an option for the company, and incurring the resulting
$640 million liability would be catastrophic. See Reasons Decl. ¶¶ 3–4, 14. 3
CMS asks the Court to ignore the company’s fragile financial status outlined
in Mallinckrodt’s declaration, because the declaration updates the prior one
submitted to the District Court. Opp. 18. The Appellate Rules require no such
thing. As CMS puts it, Rule 8(a)(1) “generally requir[es] that district courts be
given the opportunity to consider motions for injunctions pending appeal in the
first instance.” Id. Mallinckrodt did give the District Court such an opportunity—
in March. See Dkt. 37 (Mar. 16, 2020); see also Dkt. 4-2 (Declaration of Kathleen
A. Schaefer). Two-and-a-half months after asking for reconsideration, and more
than a year after first moving for preliminary injunctive relief, it was appropriate
for Mallinckrodt to provide this court with an up-to-date perspective on the
3
CMS does not challenge Mallinckrodt’s calculation that recovering
overpayments will take decades.
8
(Page 11 of Total)
company’s financial standing so that it could accurately assess irreparable harm.
This Court need not make its injunctive-relief decisions based on stale information.
CMS suggests that Mallinckrodt’s financial standing might not be that dire
because the company reported some favorable news to investors on its 2019 fourth
quarter earnings call. Opp. 20. That is a highly selective characterization. The
weight of the call focused on the key uncertainties Mallinckrodt faced—near-term
debt, the national opioid litigation, and this case. See generally Dkt. 37-3. And,
more importantly, much has changed even since then: The hope for a near-term
debt solution was replaced by a less favorable alternative; the settlement in
principle in the national opioid litigation risks being unwound; a worldwide
pandemic has caused unprecedented economic disruption; and Mallinckrodt now
faces the looming prospect of more than $640 million in liability to State Medicaid
agencies. Such developments—some crystallizing only after Mallinckrodt filed its
initial motion with the district court—warrant this Court’s consideration.
Next, CMS argues that any harm to the company will occur only in October,
meaning presumably that if this Court expedites the appeal, hears argument in
September, and issues its opinion within a very few weeks, the harm to the
company can be forestalled. Opp. 19. That puts a considerable burden on this
Court, to begin with. CMS’s delayed-harm theory also is wrong. One of two
things will happen on June 14. If Mallinckrodt fails to revise Acthar’s base date
9
(Page 12 of Total)
AMP, CMS will declare the company out of compliance, triggering a regulatory
cascade ending in automatic suspension of Mallinckrodt’s NDRA. Reasons Decl.
¶ 3. If Mallinckrodt instead revises Acthar’s base date AMP, more than $640
million will go on the company’s books immediately, triggering a different cascade
of problems veering the company towards bankruptcy. See id. ¶¶ 3–4, 13–14.
The public interest and balance of equities also weigh in favor of injunctive
relief. CMS’s assertion that Mallinckrodt has effectively retained an “interest-free
loan” assumes its preferred conclusion. Opp. 21. And Mallinckrodt in no sense
“alone bears responsibility for the magnitude of its present liability.” Opp. 20.
Mallinckrodt’s predecessor relied on CMS’s representations in 2012 that Acthar
was eligible for a new base date AMP. When the agency began equivocating years
later, Mallinckrodt sought diligently to understand and address the issue, only to be
met by prolonged periods of agency silence broken occasionally with shifting,
inconsistent, and ultimately meritless explanations. A231, A213, A161, A93. And
Mallinckrodt filed this challenge immediately after CMS threatened to declare the
company out of compliance, only to have the matter sit with the District Court for
nearly a year. Injunctive relief is needed to ensure that Mallinckrodt does not
suffer irreparable harm before getting the chance to meaningfully pursue its appeal
rights.
10
(Page 13 of Total)
CONCLUSION
For these reasons, and those in the motion, Mallinckrodt’s motion should be
granted and CMS should be temporarily enjoined from designating Mallinckrodt
“out of compliance” in the DDR system during the pendency of this appeal. In
light of Friday’s CMS guidance, Mallinckrodt also asks that CMS be enjoined
from taking any action itself that would have the effect of forcing Mallinckrodt to
update its base date AMP pending appeal. This Court should also order expedited
briefing and argument.
Respectfully submitted,
/s/ Catherine E. Stetson

Catherine E. Stetson
Susan M. Cook
Kyle M. Druding
555 Thirteenth Street, NW
Phone: (202) 637-5491
Fax: (202) 637-5910
Dated: June 8, 2020
11
(Page 14 of Total)
CERTIFICATE OF COMPLIANCE
1. This document complies with the type-volume limits of Fed. R. App. P.
27(d)(2) because, excluding the parts of the document exempted by Fed. R. App.
P. 32(f), this document contains 2,355 words.
2. This document complies with the typeface requirements of Fed. R. App.
P. 32(a)(5) and the type-style requirements of Fed. R. App. P. 32(a)(6) because this
document has been prepared in a proportionally spaced typeface using Microsoft
Word 2010 in 14-point Times New Roman.

(Page 15 of Total)
I certify that on June 8, 2020, the foregoing was electronically filed through
this Court’s CM/ECF system, which will send a notice of filing to all registered
users.

(Page 16 of Total)
ORAL ARGUMENT NOT YET SCHEDULED

No. 20-5154
IN THE
United States Court of Appeals
for the District of Columbia Circuit
MALLINCKRODT ARD LLC,

Plaintiff-Appellant,
v.
SEEMA VERMA, in her official capacity as ADMINISTRATOR, CENTERS

FOR MEDICARE & MEDICAID SERVICES, and
ALEX M. AZAR II, in his official capacity as SECRETARY, UNITED STATES
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Defendants-Appellees,
On Appeal from the United States District Court

for the District of Columbia,
No. 19-cv-1471, District Judge Thomas F. Hogan
SUPPLEMENTAL APPENDIX OF PERTINENT RECORD MATERIALS

FOR APPELLANT MALINCKRODT ARD LLC’S EMERGENCY
MOTION FOR INJUNCTION PENDING APPEAL AND TO
EXPEDITE BRIEFING AND ARUGMENT
CATHERINE E. STETSON
SUSAN M. COOK
KYLE M. DRUDING
555 Thirteenth Street, N.W.
(202) 637-5491

June 8, 2020
(Page 17 of Total)
TABLE OF CONTENTS
Page
Email from druginfo@fda.hhs.gov, CDER Division of Drug

Information, FDA, to Ruth Blatt, Pharmacist and Health Insurance
Specialist, CMS (Dec. 14, 2015), AR 154–156 .............................................SA1
Certificate of Service
i
(Page 18 of Total)
From: CDER DRUG INFO

To: Blatt, Ruth (CMS/CMCS)
Subject: RE: Acthar Gel
Date: Monday, December 14, 2015 10:00:37 AM
Dear Ms. Blatt,
Thank you for contacting the Division of Drug Information, in the FDA's Center for Drug
Evaluation and Research (CDER).
Both NDAs are currently listed in Drugs@FDA. NDA 022432 is associated with Chemical
Type 6, New indication [no longer used].
I was informed that the policy on how to list these Type 6 approvals is still being deliberated
and a decision has not been made.
Feel free to check back in a few months or periodically at the NDA listings for further
updates.
I was informed that they will save your inquiry until the time when a decision has been
made.
Thank you again for taking the time to write to us.
Best regards,
HY
Drug Information Specialist, Pharmacist
Division of Drug Information, Center for Drug Evaluation and Research
Food and Drug Administration
For up-to-date drug information, follow the FDA's Division of Drug Information on Twitter at
http://twitter.com/FDA_Drug_Info
This communication is consistent with 21 CFR 10.85(k) and constitutes an informal

communication that represents our best judgment at this time but does not constitute an
advisory opinion, does not necessarily represent the formal position of the FDA, and does
not bind or otherwise obligate or commit the agency to the views expressed.
From: Blatt, Ruth (CMS/CMCS) [mailto:Ruth.Blatt@cms.hhs.gov]

Sent: Tuesday, December 08, 2015 6:18 PM
To: CDER DRUG INFO
Cc: Blatt, Ruth (CMS)
Hello again,
Drugs@FDA is still showing that the NDA number for HP Acthar Gel is 022432. Can you tell me if
(Page 19 of Total)
SA1 HHS - 000154
that is going to be updated to reflect that the drug is marketed under NDA 008372, and when that
update would be made?
Thank you so much for your assistance.
Ruth Blatt, PD
Pharmacist, Health Insurance Specialist
CMS/CMCS/DEHPG/DP
7500 Security Blvd. S2-06-26
Baltimore, MD 21244-1850
Telephone: 410 786-1767
Email: ruth.blatt@cms.hhs.gov
From: CDER DRUG INFO [mailto:DRUGINFO@fda.hhs.gov]

Sent: Tuesday, October 27, 2015 5:35 PM
To: Blatt, Ruth (CMS/CMCS)
Dear Ms. Blatt,
Thank you for contacting the Division of Drug Information, in the FDA's Center for Drug Evaluation
and Research (CDER).
We appreciated your patience as I made some inquiries on your behalf.
I have confirmed that the only active NDA for HP Acthar Gel is 008372. I am notifying the
Drugs@FDA team about the older NDA.
Thank you again for taking the time to write to us.
Best regards,
HY
Drug Information Specialist, Pharmacist
Division of Drug Information, Center for Drug Evaluation and Research
Food and Drug Administration
For up-to-date drug information, follow the FDA's Division of Drug Information on Twitter at
http://twitter.com/FDA_Drug_Info
This communication is consistent with 21 CFR 10.85(k) and constitutes an informal communication
that represents our best judgment at this time but does not constitute an advisory opinion, does not
necessarily represent the formal position of the FDA, and does not bind or otherwise obligate or
commit the agency to the views expressed.
(Page 20 of Total)
SA2 HHS - 000155
-----Original Message-----
From: druginfo@fda.hhs.gov [mailto:druginfo@fda.hhs.gov]
Sent: Friday, October 09, 2015 3:48 PM
To: CDER DRUG INFO
Subject: Acthar Gel
Name: Ruth Blatt
E-Mail: ruth.blatt@cms.hhs.gov
Comments: Hello. I am inquiring about the NDA number under which Acthar Gel is being
marketed. When searching under the drug name, on drugs@fda, two different NDA numbers are
referenced- 008372 and 022432. However, when we look further into information on the page
associated with 022432, we find a supplement approval letter, 008372/S-044, which indicates that
NDA number 022432 will no longer be used. Does that mean than the only NDA number currently
used for the marketing of Acthar HP gel is 008372? Will the information referencing NDA 022432 be
removed from drugs@fda?
Thank you.
(Page 21 of Total)
SA3 HHS - 000156
I certify that on June 8, 2020, the foregoing was electronically filed through
this Court’s CM/ECF system, which will send a notice of filing to all registered
users.

(Page 22 of Total)

Mallinckrodt Appeal Response To Response Dated 06.08.20

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mallinckrodt Appeal Response To Response Dated 06.08.20

Uploaded by

Copyright:

Available Formats

USCA Case #20-5154 Document #1846176 Filed: 06/08/2020 Page 1 of 16

ORAL ARGUMENT NOT YET SCHEDULED

United States Court of Appeals

SEEMA VERMA, in her official capacity as ADMINISTRATOR, CENTERS

On Appeal from the United States District Court

REPLY IN SUPPORT OF MOTION FOR INJUNCTION PENDING

Counsel for Mallinckrodt ARD LLC

TABLE OF AUTHORITIES ...............................................................................ii

I. MALLINCKRODT PRESENTS A SUBSTANTIAL

A. The Government Declines To Defend The District Court’s

B. Government Counsel’s Current Explanation Was Never Given

C. The Government Fails To Engage Mallinckrodt’s Regulation-

II. THE REMAINING FACTORS SUPPORT AN INJUNCTION .................8

SEC v. Chenery Corp.,

The Government’s opposition is remarkable twice over.

First, the Government declines to defend the District Court’s novel

is whether the relevant application is “a new drug application,” which Acthar’s

Second, Government counsel asserts that CMS’s express statements in 2012

factually mistaken. Nor could such a “misunderstanding of the critical facts” be

information Questcor submitted to CMS in 2012.

misclassified drug from Federal financial participation,” triggering consequences

do on Mallinckrodt’s “behalf” what was previously incumbent on Mallinckrodt,

further exacerbating Mallinckrodt’s impending harm.

Mallinckrodt out of the DDR system. In light of Friday’s CMS guidance,

I. MALLINCKRODT PRESENTS A SUBSTANTIAL CHALLENGE TO

A. The Government Declines To Defend The District Court’s Standard.

As Mallinckrodt explained in its motion, the relevant question of statutory

interpretation here is straightforward: If Acthar is a distinct “single source drug”—

that is, “a covered outpatient drug . . . produced or distributed under a [NDA]

approved by the [FDA]”—then it is entitled to a distinct base date AMP. 42 U.S.C.

The Government disagrees—but not on the basis adopted by the District

its own base date AMP. Opp. 11–14.

Instead, the Government reverts to an argument it made on summary

application which is approved by the FDA”); A236 (“because Acthar was

tied to NDA 022432. A319.

B. Government Counsel’s Current Explanation Was Never Given By The

argues that the agency’s earlier “advice was predicated on a misunderstanding of

CMS’s apparently “erroneous assumptions.” See A40.

Government cannot in litigation briefing backfill the agency’s stated rationale in

sinks the Government’s revisionist theory.

factual mistake rather than a change in policy. During the off-and-on

communications it sent to Mallinckrodt starting in 2016, CMS offered a wide-

number appeared in the On-Line Label Repository; Acthar was a “purchased

“misunderstood” their import.

new base date AMP. Twice.

relevant to the agency’s unspoken inquiry.

The Government argues that CMS’s “core contention” has remained

failed to offer an adequate explanation—let alone a consistent one—for its change

F.3d 1121, 1124–25 (D.C. Cir. 2003).

C. The Government Fails To Engage Mallinckrodt’s Regulation-Based,

Mirroring the District Court’s approach, the Government declines to

separately address Mallinckrodt’s regulation-based, retroactivity, and fair-notice

Mallinckrodt is thus likely to succeed on its regulation-focused, fair-notice, and

retroactivity theories as well.

II. THE REMAINING FACTORS SUPPORT AN INJUNCTION.

Absent injunctive relief, Mallinckrodt faces the immediate and irreparable

in Mallinckrodt’s declaration, because the declaration updates the prior one

A. Schaefer). Two-and-a-half months after asking for reconsideration, and more

for Mallinckrodt to provide this court with an up-to-date perspective on the

company’s financial standing so that it could accurately assess irreparable harm.

weight of the call focused on the key uncertainties Mallinckrodt faced—near-term

debt solution was replaced by a less favorable alternative; the settlement in

principle in the national opioid litigation risks being unwound; a worldwide