Sarepta Therapeutics, Inc v. OHA

Under 42 USC section 1396r-8(d)(5), a state can “require, as a condition of coverage or payment for a covered outpatient drug . . . the approval of the drug before its dispensing for any medically accepted indication[.]”

Petitioner challenged the prior authorization requirements adopted by the Oregon Health Authority (OHA) for Exondys 51 under OAR 410-121-0040(3). Petitioner assigned error to the requirements that a patient must have been (1) on corticosteroid for six months, and (2) assessed "for baseline function 'using a validated'" test. Petitioner argued that OHA exceeded its statutory authority because the prior authorization requirements were not included in the FDA-approved use for the drug. In response, OHA argued that the prior authorization requirements did not exceed the statutory authority because the statute allows states to create prior authorization requirements to ensure medical necessity and to control utilization. Under 42 USC section 1396r-8(d)(5), a state can “require, as a condition of coverage or payment for a covered outpatient drug . . . the approval of the drug before its dispensing for any medically accepted indication[.]” The Court reasoned that the plain language of the statute allows states to adopt prior authorization criteria and the U.S. Supreme Court had held that the Medicaid Act gives States broad discretion to adopt prior authorization requirements. The Court found that OHA’s two criteria fell within the scope of permissible restrictions. OAR 410-121-0040(3) held valid.