Legal Challenge to CMS's BEI Program: Implications for FDA and Medicaid
A recent legal filing in the U.S. District Court for the District of Columbia challenges the Centers for Medicare & Medicaid Services (CMS) regarding its Substance Access Beneficiary Engagement Incentive (BEI) program. The plaintiffs, including MMJ International Holdings, assert that CMS has introduced cannabinoid products into Medicare pathways without requisite approval from the Food and Drug Administration (FDA) and without adhering to proper rulemaking procedures. The lawsuit seeks an injunction to halt the program, claiming it negatively impacts companies that develop products via the FDA's regulatory pathway, citing competitive harm.
Duane Boise, CEO of MMJ International Holdings, questioned whether CMS can lawfully include cannabinoids in Medicare without FDA approval. The filing accuses CMS of creating a new access point for non-FDA-approved cannabinoid products, potentially harming firms like MMJ International Holdings, which have invested substantially in developing FDA-approved treatments. MMJ has active Investigational New Drug (IND) submissions and is pursuing FDA pathways for therapeutics.
The plaintiffs argue that CMS's program changes the industry's competitive landscape, allowing non-approved products into a market traditionally dominated by FDA-compliant options. This shift reportedly disadvantages companies following FDA procedures. The filing further claims that CMS implemented the BEI program without required safety analyses, public rulemaking, or a supporting administrative record, which are mandated under the Administrative Procedure Act.
Additionally, the brief points out that the BEI program allows THC-containing products potentially exceeding federal limits, referencing forthcoming regulatory changes under the Agriculture Appropriations Act. The filing warns that this aspect of the program conflicts with federal laws and constitutes an arbitrary action by CMS.
The court filing invokes the Supreme Court's major questions doctrine, arguing that CMS lacks clear congressional authorization to implement such a program within Medicare. If upheld, this argument could restrict CMS's ability to offer cannabinoid products without explicit congressional consent.
The plaintiffs emphasize the potential for irreparable harm to the competitive integrity of the FDA-approved drug market, urging the court to block the BEI program during legal proceedings. A decision in favor of the plaintiffs could preserve the current regulatory framework by preventing non-FDA-approved access through Medicare.
MMJ International Holdings, involved in developing cannabinoid-based treatments for Huntington’s disease and multiple sclerosis, follows FDA and DEA guidelines to maintain compliance in the pharmaceutical industry.