Full opinion text
MEMORANDUM OPINION BATES, District Judge. Pharmaceutical Research and Manufacturers of America (“PhRMA”) brings this case challenging a Medicaid initiative implemented by the State of Michigan’s Department of Community Health (“DCH”) and approved by the Secretary of the United States Department of Health and Human Services (the “Secretary” or “HHS”) through the Administrator of Centers for Medicare & Medicaid Services (“CMS”). Under the initiative, unless drug manufacturers provide Michigan with rebates on drugs prescribed through Michigan’s Medicaid programs (and two non-Medicaid programs) that are greater than the rebates ordinarily required under the Secretary’s national Medicaid agreement, DCH may require that doctors prescribing the manufacturers’ drugs to Medicaid patients must seek prior authorization from the State. PhRMA asserts claims against HHS and CMS (the “Federal Defendants”) under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq., for approving portions of the initiative that PhRMA alleges violate the Social Security Act and the Commerce Clause of the Constitution. PhRMA also asserts parallel claims against DCH under the Supremacy Clause and the Commerce Clause. PhRMA is joined in certain of its claims by two plaintiff-intervenors who purport to represent the interests of Medicaid beneficiaries. Presently before the Court are PhRMA’s motion for a preliminary injunction, motions for summary judgment filed by PhRMA and the two plaintiff-in-tervenors, and cross-motions for summary judgment by the Federal Defendants and DCH. For the reasons stated below, the Court concludes that the challenged portions of DCH’s initiative, and the Secretary’s approval of those portions, withstand statutory and constitutional challenge. Accordingly, the Court grants the cross-motions for summary judgment filed by the Federal Defendants and DCH and denies PhRMA’s and plaintiff-intervenors’ motions for summary judgment. BACKGROUND A. Statutory Framework Medicaid is a cooperative federal-state program aimed at “furnish[ing] (1) medical assistance ... [to] families with dependent children and [to] aged, blind, or disabled individuals, whose incomes are insufficient to meet the costs of necessary medical services, and (2) rehabilitation and other services to help such families and individuals attain or retain capability for independence or self-care.” 42 U.S.C. § 1396. A state implementing Medicaid receives federal payments (known as federal financial participation or “FFP”) based upon amounts expended by the state as “medical assistance” under the program. Id. §§ 1396b(a)(l), 1396d(b). In order to be eligible for FFP, a state must design, and obtain the Secretary’s approval for, a state plan for implementing' Medicaid. Id. §§ 1396, 1396a. The state plan must comply with numerous requirements, including that it “provide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined, and such care and services will be provided, in a manner consistent with simplicity of administration and the best interests of the recipients.” Id. § 1396a(a)(19). This case centers around 42 U.S.C. § 1396r-8, which establishes a scheme under Medicaid for “Payment for covered outpatient drugs.” Subsection (a) of that provision specifies that states are only eligible for FFP with respect to outlays on prescription drugs where the drugs are purchased from a manufacturer that has entered into an agreement with the Secretary on behalf of states (or with a state itself) to provide rebates on its products. See id. § 1396r — 8(a)(1). Subsection (d) sets forth the circumstances under which a state may limit coverage of drugs. Among other things, subsection (d) allows a state to “subject to prior authorization any covered outpatient drug.” Id. § 1396r-8(d)(1)(A). It also provides that a state may exclude a drug from a “formulary” only if, inter alia, “the excluded drug does not have a significant, clinically meaningful therapeutic advantage.” Id. § 1396r-8(d)(4)(C). B. The Michigan Best Practices Initiative In an effort to reduce its Medicaid expenditures, the State of Michigan has instituted a prescription drug program known as the Michigan Best Practices Initiative (the “Initiative”). Pursuant to the Initiative, Michigan established a committee of physicians and pharmacists (the “Committee”) to review the scientific and clinical information concerning approximately 40 therapeutic classes of drugs on the “Michigan Pharmaceutical Product List” (the “MPPL”), a list of drugs available for reimbursement under Michigan’s Medicaid program. Administrative Record (“AR”) 373, 395-96. The 40 or so therapeutic classes of drugs reviewed by the Committee “account for the majority of increased drug spending in the Michigan Medicaid Program.” Id. at 395. The Committee sought to identify— based on clinical effectiveness and safety— at least two drugs in each therapeutic class that were the “best in class.” Id. at 373, 395. Under the Initiative, these “best in class” drugs may be prescribed by physicians to Medicaid patients without the need for prior authorization. Id. at 395-97. In contrast, drugs in each therapeutic class that are priced unfavorably compared to the lowest priced “best in class” drug are designated on the MPPL as subject to prior authorization. Id. at 373-5, 397. That is, in order for a patient’s use of an unfavorably priced non-“best in class” drug to be reimbursed under the Medicaid program, a physician must proceed through an administrative process to obtain approval from the State of Michigan’s pharmacy benefit manager to prescribe the drug. Id. Requests for prior authorization are processed within a 24-hour period and a 72-hour supply of a medically necessary covered drug is provided in an emergency situation. Id. at 4. Under the Initiative, manufacturers whose drugs are not identified as “best in class” can still ensure that their drugs are available without prior authorization, provided that they sign two agreements with the State of Michigan. Id. at 304-05, 380. First, a drug manufacturer must sign, on a drug-by-drug basis, an agreement requiring the manufacturer to provide a rebate that effectively reduces the price of its drug to that of the “best-priced clinically selected product” in the class — i.e., to the lowest price available in the United States for the lowest priced “best in class” drug in the relevant therapeutic class. See AR at 7-14; SAR at 307. This agreement is denominated a “Supplemental Drug Rebate Agreement” because the rebate is over and above the rebate that a manufacturer is otherwise required to provide under the rebate agreement negotiated by the Secretary and the manufacturer under the Social Security Act. See 42 U.S.C. § 1396r — 8(c)(1); DCH’s Statement of Uncontested Facts ¶ 11. Second, a manufacturer must sign a “Non-Medicaid Agreement” requiring it to provide rebates on its drugs prescribed under certain non-Medicaid programs; those rebates effectively reduce the prices for those drugs to the prices of the “best-priced clinically selected product” for each class. See SAR at 306-08, 717-724. Previously, nothing under the Social Security Act or Michigan’s Medicaid program required manufacturers to provide any rebates with respect to these non-Medicaid programs. Pursuant to the requirements of the Social Security Act, see 42 U.S.C. § 1396, in the fall of 2001, DCH submitted to the Secretary for approval a proposed State Plan Amendment (“SPA”) to Michigan’s State Medicaid Plan that would accommodate the new prescription drug program under the Initiative. CMS thereafter requested that DCH make certain changes to the proposed SPA, including specifically that DCH clarify that “the State Plan Amendment and State of Michigan Supplemental Drug Rebate Agreement ... require drug rebates with respect to the Medicaid population only.” AR at 100. In response, DCH removed from its proposed Supplemental Drug Rebate Agreement “all references to non-Medicaid state funded pharmacy programs” and “included a statement in the SPA that the supplemental rebate contained in the SPA is for the Medicaid population only.” Id. at 58. On January 24, 2002, the Secretary approved the SPA — “SPA 01-015” — and the specific terms of the Supplemental Drug Rebate Agreement. Id. at 1. On February 1, 2002, DCH began pre-implementation testing of the Initiative, and by March 19, 2002, the Initiative was fully operational. C. Procedural History On June 28, 2002, PhRMA filed a complaint and a motion for a preliminary injunction in this Court challenging the Secretary’s approval of SPA 01-015 on four grounds: (1) that it establishes an “illegal drug formulary” in violation of 42 U.S.C. § 1396r-8(d), Compl. ¶¶ 61-68; (2) that it permits “supplemental rebates” in addition to and above the rebates permitted under the Social Security Act in violation of 42 U.S.C. § 1396r-8(a)(l), Compl. ¶¶ 69-74; (3) that it “imposes prior authorization on Medicaid prescription drugs in the event that manufacturers refuse to provide rebates to members of the non-Medicaid population in Michigan,” in violation of the “best interests” requirement of 42 U.S.C. § 1396a(a)(19), Compl. ¶¶ 75-82; and (4) that the “price benchmarking” mechanisms in both the Supplemental Drug Rebate Agreement and the Non-Medicaid Agreement violate the Commerce Clause because they tie in-state drug prices to drug prices outside of Michigan, Compl. ¶¶ 83-88. Pursuant to an agreement of the parties, the Court entered an order for a briefing schedule on the motion for a preliminary injunction and set a hearing date of August 28, 2002. The subsequent procedural history of this case is complex, but bears review to illustrate the evolution of the claims and defenses in this litigation. On July 25, 2002, DCH moved to intervene as a defendant, claiming that it was the “true party-in-interest” and that it was best situated to explain and defend the Initiative. Mem. Supp. DCH’s Mot. Intervene at 2. On July 29, 2002, the Court granted DCH’s motion. Three weeks later, the Court granted a motion to intervene as plaintiffs by the National Alliance for the Mentally Ill of Michigan (“NAMI”), an organization that purports to represent the interests of the mentally ill of Michigan and their families, and the National Urban Indian Coalition (“NUIC”), an organization that purports to represent the interests of American Indians living in urban areas, many of whom are Medicaid recipients, and the interests of urban Indian Centers, which provide assistance to those persons. NAMI and NUIC joined in PhRMA’s motion for a preliminary injunction but their allegations were (and are) limited to the contention that the Secretary acted unlawfully in approving components of the Initiative because they violate the formulary requirements of § 1396r-8(d)(4) and are contrary to the “best interests” of Medicaid recipients, see 42 U.S.C. § 1396a(a)(19). On August 27, 2002, one month after DCH intervened in the case, and the day before the hearing on the motion for a preliminary injunction, PhRMA amended its complaint to add claims against DCH under the Supremacy Clause and the Commerce Clause. These claims roughly parallel the claims asserted against the Federal Defendants.. The Court advised PhRMA that it would not consider the claims against DCH for the purposes of evaluating the motion for a preliminary injunction. At the August 28, 2002, hearing, the Federal Defendants took the position that, because SPA 01-015 as approved concerned Michigan’s Medicaid population only, there was no agency action for the Court to review with respect to the Initiative’s requirement that manufacturers provide rebates for drugs prescribed to non-Medicaid populations in order to avoid Medicaid prior authorization. Counsel for the Federal Defendants explained that “right now there’s no requirement for approval of this sort of program by either statute or regulation, and the state had no basis for assuming that approval was required in this sort of case.” Tr. of Aug. 28, 2002, Hearing at 65. One month later, the Federal Defendants had changed course. The Court received notice from the Federal Defendants that on September 18, 2002, the Director of CMS issued a letter to State Medicaid Directors (the “SMD Letter”) stating that: (1) “States may enter separate or supplemental drug rebate agreements as long as such agreements achieve drug rebates equal to or greater than the drug rebate set forth in the Secretary’s national rebate agreement with drug manufacturers”; (2) “[a] prior authorization program does not need to comply with the requirements for restrictive formularies”; (3) “States may subject covered outpatient prescription drugs to prior authorization as a means of encouraging drug manufacturers to enter into separate or supplemental rebate agreements for covered drugs purchased by Medicaid recipients”; (4) states may establish “a prior authorization program for Medicaid covered drugs to secure drug benefits, rebates or discounts for non-Medicaid populations” where the “prior authorization program will further the goals and objectives of the Medicaid program”; and (5) CMS expects that states seeking to establish prior authorization programs as a means of encouraging rebates for either Medicaid or non-Medicaid populations will submit a proposed state plan amendment for approval by the Secretary. See Fed. Defs.’ Notice Supp. Auth. (Sept. 27, 2002), Ex. A. The Federal Defendants further advised the Court that, consistent with the SMD Letter, DCH on September 23, 2002, submitted to the Secretary for review a proposed SPA “regarding its supplemental rebate/prior authorization program for certain groups of non-Medicaid eligible individuals who are either very low income or have extraordinary medical needs.” Fed. Defs.’ Notice Supp. Auth. (Sept. 27, 2002) at 3. On October 9, 2002, the Federal Defendants explained that CMS anticipated issuing a decision on DCH’s proposed SPA within the next three weeks. CMS did not meet that goal. The Court held a conference with the parties and intervenors several weeks later, on December 6, 2002, to receive an update on the status of the proposed SPA (“SPA 02-019”). The Federal Defendants informed the Court that, on the preceding day, the Secretary had approved SPA 02-019, which required that a manufacturer agree to provide rebates in two of Michigan’s non-Medicaid programs, the Elder Prescription Insurance Company Program (“EPIC”) and the Maternity Outpatient Medical Service (“MOMS”), in order to guarantee that the manufacturer’s drugs would be available to Medicaid recipients without prior authorization. The Federal Defendants submitted an administrative record and a decision letter supporting the Secretary’s determination. See SAR at 712-715. The Federal Defendants further advised the Court that SPA 02-019, as initially submitted, would have required that, as a condition to evading Medicaid prior authorization, drug manufacturers participate in two other non-Medicaid programs in addition to EPIC and MOMS. DCH withdrew the portion of its proposed SPA with respect to these two other programs, the State Medical Program (“SMP”) and the Children’s Special Health Care Services Program (“CSHCS”), on December 3, 2002. Id. at 708. At the December 6, 2002, conference, DCH nevertheless informed the Court that it had been requiring, and would continue to require, manufacturers to provide rebates with respect to SMP and CSHCS, as well as EPIC, MOMS, and Medicaid itself, in order to guarantee that their drugs would be available to Medicaid recipients without prior authorization. See id. at 708-709. DCH asserted that it did not believe that the Secretary’s approval was required for the implementation of the non-Medicaid aspects of the Initiative. On December 13, 2002, pursuant to a briefing schedule established by the Court, PhRMA and plaintiff-intervenors submitted motions for summary judgment, and PhRMA submitted a supplemental motion for a preliminary injunction. The Federal Defendants and DCH cross-moved for summary judgment one week later. On January 6, 2003, prompted by an argument in DCH’s brief that PhRMA’s complaint against DCH did not comply with Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), PhRMA moved for leave to amend its complaint a second time to name the Director of DCH, rather than DCH itself, as the defendant on PhRMA’s Supremacy Clause and Commerce Clause claims. A hearing on the outstanding motions was held on February 5, 2003. At the hearing, the Federal Defendants advised the Court that DCH had recently submitted a new proposed SPA (“SPA 02-21”) with respect to the SMP and CSHSC programs. Nevertheless, as before, DCH maintained that it could maintain a linkage between the SMP and CSHCS programs and its Medicaid prior authorization program despite the absence of approval from the Secretary. The Federal Defendants, for their part, argued that there was as yet no agency action for the Court to review with respect to the SMP and CSHCS programs and that the Court lacked authority to order the Secretary to initiate a compliance action against DCH for operating an unapproved program. PhRMA, NAMI, and NUIC took the position that either DCH’s implementation of the SMP and CSHCS aspects of the Initiative without the Secretary’s approval was unlawful or the Secretary had de facto approved those aspects by declining to halt them. The Court urged CMS to review DCH’s proposed amendment concerning the SMP and CSHCS programs expeditiously and expressed its continuing frustration (and skepticism) regarding CMS’s piecemeal approach to its review of the Initiative — an approach that had already substantially delayed the progress of this litigation. Nine days later, the Federal Defendants filed a decision document and supporting administrative record denying approval for SPA 02-21. DCH, in turn, advised the Court that although it expected to appeal the denial to the Sixth Circuit, in the interim it would not continue to require that manufacturers sign rebate agreements concerning the SMP and CSHCS programs as a condition for avoiding Medicaid prior authorization. See Notice of DCH’s Discontinuance of Certain Portions of the Mich. Initiative at 1-2. ANALYSIS I. Summary Judgment Standard Summary judgment is appropriate when the pleadings and the evidence demonstrate that “there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The party seeking summary judgment may successfully support its motion by “informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). In opposing summary judgment, the “nonmoving party [must] go beyond the pleadings and by [its] own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’ ” Id. at 324, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 56(c), (e)). In determining whether there exists a genuine issue of material fact sufficient to preclude summary judgment, the court must regard the nonmovant’s statements as true and accept all evidence and make all inferences in the nonmovant’s favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A nonmoving party, however, must establish more than the “mere existence of a scintilla of evidence” in support of its position. Id. at 252, 106 S.Ct. 2505. “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Id. at 249-50, 106 S.Ct. 2505 (internal citations omitted). II. Standing Before considering the merits of the claims asserted in this litigation, the Court must assess as a threshold matter PhRMA’s, NAMI’s and NUIC’s standing. See La. Envtl. Action Network v. Browner, 87 F.3d 1379, 1382 (D.C.Cir.1996) (“[Before we reach the merits of any claim, we must first assure ourselves that the dispute lies within the constitutional and prudential boundaries of our jurisdiction.”). There are, of course, two principal forms of standing, “Article III (case or controversy)” standing and “prudential” standing, each of which must be considered. Mudd v. White, 309 F.3d 819, 823 (D.C.Cir.2002). A. Constitutional Standing Article III standing entails three requirements: First, the plaintiff must have suffered an “injury in fact” — an invasion of a legally protected interest which is (a) concrete and particularized, and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical.’ ” Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be “fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court.” Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.” The party invoking federal jurisdiction bears the burden of establishing these elements. Since they are not mere pleading requirements but rather an indispensable part of the plaintiffs case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal citations omitted). Because PhRMA, NUIC, and NAMI are all associations purporting to bring claims on behalf of their members, a further layer of standing requirements must also be satisfied. Specifically, each association must demonstrate that (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the association’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 342, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). 1. PhRMA Here, there is no real dispute that PhRMA satisfies the Article III requirements for bringing a case on behalf of its members, who are drug manufacturers seeking to sell their products for use in Michigan’s Medicaid program and elsewhere. These drug manufacturers allegedly suffer cognizable injury, specifically, economic harm, as a result of the implementation of the Initiative and the Secretary’s approval of components of it. See, e.g., Declaration of John Alivernini ¶¶ 8-11; Declaration of George Bilyk ¶¶ 8-11; Declaration of Russel A. Banthan ¶¶ 11-13, 15. Moreover, this lawsuit is undoubtedly germane to PhRMA’s purpose, which is to serve as the pharmaceutical industry’s principal policy advocate. Banthan Decl. ¶¶ 4-5; see Humane Soc’y of the U.S. v. Hodel, 840 F.2d 45, 56 (D.C.Cir.1988) (ger-maneness prong requires “only that an organization’s litigation goals be pertinent to its special expertise and the grounds that bring its membership together”). In addition, PhRMA’s claims can be resolved on the basis of the record compiled for the Court without the participation of PhRMA’s individual members. The more challenging questions of constitutional standing concern the plaintiff-intervenors NAMI and NUIC. 2. NAMI NAMI is an organization representing the interests of Michigan residents who are diagnosed with major mental illnesses. Affidavit of Hubert Huebl, M.D. ¶ 7. It intervened in this lawsuit to assert the interests of Medicaid beneficiaries under 42 U.S.C. § 1396a(a)(19), and, in particular, to assert that the Secretary had approved an illegal formulary that was contrary to the “best interests” of Medicaid beneficiaries. DCH challenges NAMI’s constitutional standing to participate in this lawsuit. Like PhRMA., NAMI must satisfy the three-part test for associational standing described in Hunt. There is little doubt that the claim asserted by NAMI is germane to its purpose, which includes advocating for policies and legislation that will improve the quality of treatment available to persons with serious mental illness. Id. ¶ 8. Furthermore, there is no need for NUIC’s individual members to participate in the lawsuit. The critical question as to NAMI’s standing is whether any of its members would have standing to sue in their own right. DCH argues that NAMI has not demonstrated that it even has members who themselves suffer from mental illness, much less members who participate in the Medicaid fee-for-service program at issue and have suffered or will suffer actual or imminent injury. Notably, the affidavit submitted by NAMI’s president in connection with its motion to intervene appears crafted to evade the question whether NAMI’s current membership actually includes mentally ill persons or only the family members of such persons. See id. ¶ 5 (“NAMI-Michigan’s membership is comprised of family members of persons with several mental illness, and over the past decade, mental health consumers have become members of the organization as well.”).' Three weeks after the February 5, 2008, summary judgment hearing, at which the Court expressed some concern on this issue, and two months after DCH first challenged NAMI’s standing, NAMI filed with the Court a declaration explaining that NAMI’s membership does, indeed, include mental health consumers, in particular “consumer members ... enrolled in Medicaid fee-for-service.” Declaration of Fred Cummins ¶¶ 2-5. Although inexplicably belated, this evidence certainly goes a long way towards remedying a key omission from NAMI’s earlier submission. But still missing in NAMI’s materials is any specific factual support that a particular member of NAMI has suffered, or imminently will suffer, concrete harm as a result of the Secretary’s approval of components of the Initiative. Although NAMI’s president, Dr. Hubert Huebl, affirms that “mental health consumers” and “constituents” have experienced hardships since the Initiative began — delay in approval for (or outright denial of) medications they have been receiving, decom-pensation, re-hospitalization, and switching of medications without their guardians’ knowledge, see Huebl Aff. ¶¶ 10, 15, 28, 25-27 — it remains unclear, even after NAMI’s recent submission, whether the particular injured “mental health consumers” and “constituents” referenced by Dr. Huebl are in fact members of NAMI, or whether NAMI is merely alleging an interest aligned with those persons. Moreover, Dr. Huebl’s highly generalized description of the injuries suffered by these “mental health consumers” and “constituents” — a description that fails to identify by name any allegedly injured person and lacks supporting details concerning the circumstances of any specific incident of harm— begs the question whether Dr. Huebl even has personal knowledge that enables him to provide competent testimony that individuals have been injured as a result of the Initiative. Accordingly, given the late stage of the litigation, NAMI’s submissions fall short of meeting its burden to establish standing. See Sierra Club v. EPA, 292 F.3d 895, 899 (D.C.Cir.2002) (“On a motion for summary judgment ... ‘the plaintiff can no longer rest on such ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific facts.’ ” ’ (quoting Defenders of Wildlife, 504 U.S. at 561, 112 S.Ct. 2130)). 3. NUIC NUIC is a newly formed non-profit organization purporting to “represent] a united front of Urban Indians, Urban Indian Centers, urban Tribes and National Urban Indian organizations from across the United States in order that urban Indians do not lose additional programs and services.” Declaration of Patricia Newada ¶ 3; see also Declaration of Fay Givens ¶¶ 2-3. NUIC asserts that two elements of its constituency — individual Medicaid beneficiaries and urban Indian Centers that provide services to low-income urban Indians — have been harmed by the Initiative. First Am. Compl. of PL Intervenors ¶ 10. Like NAMI, NUIC alleges that the Secretary’s approval violates the formulary provisions of 42 U.S.C. § 1396r-8(d) as well as the “best interests” provision of 42 U.S.C. § 1396a(a)(19). No question has been raised as to whether this lawsuit is germane to NUIC’s purpose or whether NUIC’s individual members are needed to participate in the litigation. DCH does, however, raise a challenge under the first of the three Hunt criteria, arguing that NUIC has not established that it has members who are Medicaid beneficiaries and thus who could sue in their own right. The Court agrees with DCH that although NUIC purports to represent a “united front” including “Urban Indians,” NUIC has, in fact, failed to demonstrate that its membership includes any individuals who are Michigan Medicaid fee-for-serviee recipients. Indeed, although NUIC has submitted several declarations from Michigan Medicaid recipients, none of those persons claims to be a member of NUIC. NUIC has, however, established that its membership includes urban Indian Centers, “stand-alone non-profit Indian controlled organizations” that provide programs and services to urban Indians. Newada Decl. ¶ 3. Among NUIC’s members is American Indian Services, Inc. (“AIS”), which provides urban Indians in the Detroit, Michigan, area with food, transportation, housing, help with utility bills and water bills, and financial assistance for prescription drugs. Givens Decl. ¶ 3, 8. AIS’s Executive Director, who is also the President of NUIC, explains that many urban Indians rely upon Medicaid to cover their health care needs, and that since the Initiative began, AIS has “noticed a substantial increase in the number of Native Americans asking [AIS] to purchase prescription drugs on their behalf, because these drugs are not available to them through Medicaid.” Id. ¶¶ 4, 7. AIS provides the requested assistance with monies from its restricted funds, thus diverting monies that would otherwise be allocated towards providing food, transportation, housing and other assistance. Id. ¶¶ 7-8. If the Initiative is allowed to continue, AIS claims, the provision of prescription medication will ultimately crowd-out AIS’s provision of other services for urban Indians. Id. ¶ 8. Precedents in the Supreme Court and in this Circuit make clear that where an organization is frustrated in its ability to carry out its programs and experiences a drain on its resources due to a defendant’s alleged actions, the organization has standing to sue in its own right. See, e.g., Havens Realty Corp. v. Coleman, 455 U.S. 363, 379, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982) (frustration of organization’s ability to carry out its mission, and drain on organization’s resources, sufficient to confer standing); Fair Employment Council of Greater Wash., Inc. v. BMC Marketing Corp., 28 F.3d 1268, 1276 (D.C.Cir.1994) (allegations that defendant’s actions interfered with organization’s programs and caused organization to expend resources sufficient to confer standing); Nat’l Fair Housing Alliance v. Prudential Ins. Co. of Am., 208 F.Supp.2d 46, 53 (D.D.C.2002) (expenditure of scare resources as a result of defendant’s action sufficient to confer standing). Consistent with these cases, AIS would have standing to sue in its own right because, allegedly as a result of the Initiative, its ability to provide housing, food, transportation, and other services is being adversely impacted by its increased need to devote resources to prescription drugs. NUIC, in turn, thus has assoeia-tional standing under Hunt to bring a claim based upon alleged harm to AIS and other urban Indian Center members. B. Prudential Standing Having determined that PhRMA and NUIC both have constitutional standing to pursue their claims, the Court must proceed to assess prudential standing. The Court need not evaluate the prudential standing of both PhRMA and NUIC with respect to each claim. As the D.C. Circuit has explained, “if constitutional and prudential standing can be shown for at least one plaintiff’ with respect to each claim asserted, the Court “need not consider the standing of the other plaintiffs to raise that claim.” Mountain States Legal Found., 92 F.3d at 1232. Prudential standing requirements are “ ‘judicially self-imposed limits on the exercise of federal jurisdiction’ ” that may be modified by Congress. Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (quoting Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984)). “[Ajmong these prudential requirements is the doctrine of particular concern in this case: that a plaintiffs grievance must arguably fall within the zone of interests protected or regulated by the statutory provision or constitutional guarantee invoked in the suit.” Id. Under this doctrine, a plaintiff will be denied a right of review if its “interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.” Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 399, 107 S.Ct. 750, 93 L.Ed.2d 757 (1987). The D.C. Circuit has clarified that the inquiry “focuses, not on those who Congress intended to benefit, but on those who in practice can be expected to police the interests that the statute protects.” Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1075 (D.C.Cir.1998). A court must conduct the “zone of interests” inquiry with “‘reference to the particular provision of law upon which the plaintiff relies.’ ” Grand Council of the Crees (of Quebec) v. FERC, 198 F.3d 950, 956 (D.C.Cir.2000) (quoting Bennett v. Spear, 520 U.S. at 175-76, 117 S.Ct. 1154). Although the court looks at that provision “in combination with other provisions to which it bears an ‘integral relationship,’ ” Nat’l Petrochem. & Refiners Ass’n v. EPA, 287 F.3d 1130, 1147 (D.C.Cir.2002) (quoting Fed’n for Am. Immigration Reform, Inc. v. Reno, 93 F.3d 897, 903 (D.C.Cir.1996)), “Congress’s purposes in enacting the overall statutory scheme are relevant only insofar as they may help reveal its purpose in enacting the particular provision.” Grand Council of the Crees (of Quebec), 198 F.3d at 956 (emphasis omitted). Importantly, the zone of interests test is not meant to be “especially demanding.” Clarke, 479 U.S. at 399, 107 S.Ct. 750. 1. “Illegal Formulary” The first claim raised in this litigation, which is asserted by both PhRMA and NUIC, is that DCH’s prior authorization program operates as an “illegal formulary” in violation of 42 U.S.C. § 1396r-8(d)(4). That provision sets forth requirements for excluding drugs from a formulary in a state Medicaid program, among other things specifying that a drug may only be excluded if it lacks a clinically meaningful therapeutic advantage. The requirements in subsection (d)(4) appear on their face to be targeted at protecting beneficiaries’ interests in maximizing the pool of medications available under Medicaid. At a surface level, the interests of profit-seeking drug manufacturers do not seem to be protected by § 1396r-8(d)(4). But when states seek to exclude drugs from Medicaid coverage, the interests of Medicaid beneficiaries and the interests of drug manufacturers in fact are very much aligned. Indeed, in practice, drug manufacturers “can be expected to police” improper limitations on the availability of prescription drugs to Medicaid beneficiaries. See Mova Pharm. Corp., 140 F.3d at 1075. Given that Congress considered drug manufacturers to be integral participants in the scheme for providing discounted drugs to beneficiaries, it is at least arguable that Congress anticipated that manufacturers would rally with beneficiaries against undue state restrictions on access to prescription drugs under § 1396r-8(d)(4). Thus, in light of the relaT five laxness of the prudential standing test, see Clarke, 479 U.S. at 399, 107 S.Ct. 750, there is a firm basis upon which to conclude that PhRMA has prudential standing to raise its “illegal formulary” claim. But in any event it is plain that NUIC has prudential standing to bring a challenge under the formulary provisions. As discussed above, urban Indian Centers such as AIS not only have a philosophical interest in ensuring that indigent urban Indians receive Medicaid services, but they also suffer concretely themselves when they must divert funds towards providing assistance with prescription drugs to compensate for restrictions on beneficiaries’ access. The interests of the urban Indian Centers thus “coincide — i.e., systematically, not fortuitously,” see Hazardous Waste Treatment Council v. Thomas, 885 F.2d 918, 924 (D.C.Cir.1989), with the interests in maximizing the availability of drugs to beneficiaries that § 1396r — 8(d) (4) was meant to protect. By implication, NUIC, which represents the interests of urban Indian Centers such as AIS, has prudential standing to assert a claim under § 1396r — 8(d)(4). 2. Supplemental Rebate PhRMA’s second claim against the Federal Defendants, which is not joined by NUIC, is that the supplemental rebate that DCH seeks from drug manufacturers violates 42 U.S.C. § 1396r-8(a)(1), which requires the Secretary to enter into a rebate agreement with a manufacturer or authorize state rebate agreements with a manufacturer. The evident purpose of § 1396r-8(a)(l) is to secure for the government a discount off the market price of pharmaceuticals. See PhRMA v. Thompson, 251 F.3d 219, 226 (D.C.Cir.2001) (“[I]t is ... obvious that Congress’s purpose in requiring manufacturer rebates was to reduce the cost of the Medicaid program.”). Importantly, § 1396r-8(a)(l) is intertwined with the other provisions of subsections (a), (b), and (c), which not only set forth several requirements for rebate agreements but also impose specific obligations upon drug manufacturers with respect to their participation in the rebate scheme. In other words, § 1396r-8(a)(l), understood in connection with the related aspects of subsections (a), (b), and (c) of § 1396r-8, is a means of regulating manufacturers’ provision of rebates. Seen in this light, PhRMA’s complaint that the DCH rebate agreements approved by the Secretary are inconsistent with the rebate scheme intended by Congress “is arguably within the zone of interests to be protected or regulated” by § 1396r-8(a)(l). See Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). It is reasonable to conclude that Congress intended to allow manufacturers to bring suit for an alleged improper approval by the Secretary of a state rebate agreement because, although the manufacturers are not themselves the direct subjects of the Secretary’s approval, the manufacturers are as a practical matter regulated by that action. Therefore, PhRMA, as a representative of drug manufacturers affected by allegedly improperly approved state rebate agreements, has prudential standing to proceed with a challenge under § 1396r-8(a). 3. “Best Interests” PhRMA’s third claim, which is joined by NUIC, is that the Secretary’s approval of DCH’s use of prior authorization as a means to encourage rebates in non-Medicaid programs violates 42 U.S.C. § 1396a(a)(19). That provision requires that a state Medicaid plan “provide such safeguards as may be necessary to assure that ... care and services will be provided, in a manner consistent with simplicity of administration and the best interests of [Medicaid] recipients.” 42 U.S.C. § 1396a(a)(19). As is plain from the language of § 1396a(a)(19), the “best interests” requirement is intended to protect the administration of the Medicaid program and the interests of Medicaid recipients with respect to their health care. There is certainly some question as to whether PhRMA has standing to raise a “best interests” claim under § 1396a(a)(19). Although as noted above, the interests of drug manufacturers may be aligned with those of beneficiaries in the context of state attempts to exclude drugs from a formulary under § 1396r-8(d)(4), it is far less evident that the interests of drug manufacturers “coincide — i.e., systematically, not fortuitously,” see Hazardous Waste Treatment Council, 885 F.2d at 924, with the “best interests” of Medicaid recipients more generally. Indeed, there is an inherent tension between the interests of beneficiaries and those who are supplying (for profit) the drugs being used. Regardless, it is clear enough that NUIC has prudential standing to raise this claim. AIS and other urban Indian Centers that provide assistance to Medicaid beneficiaries have an interest in minimizing beneficiaries’ burdens under Medicaid lest the beneficiaries seek from the Centers additional funds for health care that were to be allocated for food, housing, and other uses. The Centers thus have interests virtually congruent with those of beneficiaries under the “best interests” requirement of subsection (a)(19). Moreover, the harm allegedly suffered by the Centers as a result of restrictions in Medicaid means that the Centers “in practice can be expected to police” threats to the beneficiaries’ interests — just as they have (through NUIC) by bringing this litigation. See Mova Pharm. Corp., 140 F.3d at 1075. Certainly, it cannot be said that the interests of urban Indian Centers that provide assistance to indigent Native Americans are “so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.” Clarke, 479 U.S. at 399, 107 S.Ct. 750. Accordingly, NUIC, if not PhRMA, can proceed with its “best interests” claim under § 1396a(a)(19). 4. Constitutional Provisions The remaining provisions to be assessed for prudential standing purposes are the Commerce Clause and the Supremacy Clause, which are relevant only on claims asserted by PhRMA. No party seriously contests PhRMA’s standing to raise a challenge under either of these clauses. PhRMA, whose members engage in interstate commerce, has interests clearly within the scope of the Commerce Clause’s protections. See Oxford Assocs. v. Waste Sys. Auth. of E. Montgomery County, 271 F.3d 140, 146 (3d Cir.2001) (“The Supreme Court has explained that the Commerce Clause was not only designed to protect the states, but was also ‘intended to benefit those [individuals] who ... are engaged in interstate commerce. The ‘[constitutional protection against burdens is for [their] benefit).’ ” (quoting Dennis v. Higgins, 498 U.S. 439, 448-49, 111 S.Ct. 865, 112 L.Ed.2d 969 (1991)). Moreover, the First Circuit, in a case involving a similar Medicaid prior authorization program, has concluded that “an entity does not need prudential standing to invoke the protection of the Supremacy Clause.” PhRMA v. Concannon, 249 F.3d 66, 73 (1st Cir.2001), cert. granted, 536 U.S. 956, 122 S.Ct. 2657, 153 L.Ed.2d 833 (U.S. June 28, 2002) (No. 01-188) (citing St. Thomas-St. John Hotel & Tourism Ass’n v. Virgin Islands, 218 F.3d 232, 241 (3d Cir.2000)). Accordingly, the Court finds no prudential standing obstacle to PhRMA’s pursuit of its constitutional claims against DCH. III. Motion for Leave to File Second Amended Complaint One additional preliminary matter, PhRMA’s Motion for Leave to File Second Amended Complaint, remains to be decided before the Court can consider the merits of the pending claims. As noted earlier, PhRMA filed an amended complaint asserting claims against DCH analogous to the claims asserted against the Federal Defendants on August 27, 2002. PhRMA named DCH itself, not DCH’s Director or another state official, as the defendant on its claims. On January 6, 2003, in response to an argument raised in DCH’s cross-motion for summary judgment, PhRMA moved for leave to amend its complaint a second time in order to ensure compliance with the Eleventh Amendment. Specifically, PhRMA seeks leave to name the Director of DCH, Janet Olszewski, rather than DCH itself, as the defendant on its Supremacy Clause and Commerce Clause claims. A party seeking to amend its complaint a second time may do so only by leave of court or. by written consent of the adverse party. See Fed.R.Civ.P. 15(a). Leave is to be freely given when justice so requires. Id. A trial court abuses its discretion in denying leave to amend unless the court provides a sufficiently compelling reason for denial, such as undue delay, undue prejudice to the other party, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, or futility of amendment. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.Cir.1996). An amendment is considered futile if the proposed complaint would not survive a motion to dismiss. See James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C.Cir.1996). Here, DCH argues for futility on three grounds — that the Court lacks personal jurisdiction over Ms. Olszewski, that this is not the proper venue for adjudicating claims against Ms. Olszewski, and that PhRMA’s claims are barred on the grounds of res judicata in light of a recent decision by the Michigan Court of Appeals. The Court notes, as an initial matter, that PhRMA’s present amended complaint indeed appears to be defective under the Eleventh Amendment because it purports to name a state agency rather than an official as the defendant. See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) (“It is clear, of course, that in the absence of consent a suit in which the State or one of its agencies or departments is named as the defendant is proscribed by the Eleventh Amendment.”). PhRMA’s proposed amendment naming Ms. Olszew-ski as the defendant on its Supremacy Clause claims would cure this defect under the doctrine of Ex parte Young and its progeny. See Ex parte Young, 209 U.S. 123, 159-60, 28 S.Ct. 441, 52 L.Ed. 714 (1908); Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 73, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996) (“[W]e often have found federal jurisdiction over a suit against a state official when that suit seeks only prospective injunctive relief in order to end a continuing violation of federal law.” (citation omitted)). Notably, other courts have allowed similar amendments in order to ensure compliance with Ex parte Young. See Brown v. Georgia Dep’t of Revenue, 881 F.2d 1018, 1022-23 (11th Cir.1989); CSX Transp., Inc. v. Georgia Pub. Serv. Comm’n, 944 F.Supp. 1573, 1577 (N.D.Ga.1996). The Court is not persuaded by DCH’s arguments that the proposed amendment is futile due to lack of personal jurisdiction or want of venue. DCH voluntarily intervened in this case, thus becoming a full participant in this lawsuit and assuming the risk that the Court could order relief against it. Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007, 1017 (D.C.Cir.1985) (“When a party intervenes, it becomes a full participant in the lawsuit and is treated just as if it were an original party.”); see Secs. Indus. Ass’n v. Bd. of Governors of the Fed. Reserve Sys., 628 F.Supp. 1438, 1440 (D.D.C.1986) (where party had intervened to defend suit against Federal Reserve Board, it “assumed the risk that it would not prevail and that an order adverse to its interests would be entered”). Accordingly, DCH cannot now be heard to object that the Court lacks jurisdiction over it or that venue is improper. See County Sec. Agency v. Ohio Dep’t of Commerce, 296 F.3d 477, 483 (6th Cir.2002) (“a motion to intervene is fundamentally incompatible with an objection to personal jurisdiction”); Secs. Indus. Ass’n, 628 F.Supp. at 1440 (interve-nor may not object to injunction issued against it on personal jurisdiction grounds). Moreover, DCH waived any objections to jurisdiction or venue with respect to claims against it or its officials because it never raised these objections in any of its earlier filings with this Court. See Barnstead Broad. Corp. v. Offshore Broad. Corp., 869 F.Supp. 35, 38-39 (D.D.C.1994) (defendant waived objections on personal jurisdiction and venue grounds by not raising them in its opposition to a motion for a preliminary injunction); George Washington Univ. v. Diad, Inc., Civ. A. No. 96-301, 1996 WL 470363, at *1 (D.D.C. Aug.9,1996) (defendant waived objections to personal jurisdiction and venue by failing to raise them in five pleadings filed prior to motion to dismiss). The fact that DCH, not Ms. Olszewski, is the nominal intervenor in this case does not somehow provide a basis upon which Ms. Olszewski (and by implication DCH) can avoid the Court’s jurisdiction. There can be little doubt that Ms. Olszewski has had full awareness of these proceedings and, as DCH’s Director, bears responsibility for DCH’s continuing role in them. Moreover, although Ex parte Young draws a distinction between state officials and the state itself for subject matter jurisdiction purposes, DCH has not established that this distinction is relevant for purposes of analyzing personal jurisdiction or venue. See Kentucky v. Graham, 473 U.S. 159, 166, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985) (“[A]n official-capacity suit is, in all respects other than name, to be treated as a suit against the entity.”). Accordingly, Ms. Olszewski is properly before the Court at this time. DCH’s res judicata argument also fails. By way of background, DCH’s argument relates to litigation filed by PhRMA against DCH in Michigan state court in November 2001 seeking to enjoin implementation of the Initiative. The suit was brought primarily on state law grounds, but PhRMA also asserted a claim under the Commerce Clause. DCH removed the case to the United States District Court for the Western District of Michigan, which then remanded PhRMA’s state law claims to state court and held PhRMA’s Commerce Clause claim in abeyance. The state trial court issued a preliminary injunction against the Initiative, but that order was stayed by the Michigan Court of Appeals pending DCH’s appeal. In the meantime, PhRMA sought and obtained from the federal court in the Western District of Michigan a dismissal without prejudice of PhRMA’s Commerce Clause claim. On December 13, 2002, the Michigan Court of Appeals reversed the trial court’s grant of a preliminary injunction, holding that PhRMA was not likely to prevail on the merits of its state law claims. Based on this procedural history, DCH now argues that PhRMA is precluded from bringing claims against it. DCH points out that the Michigan courts have “adopted a broad application of res judica-ta that bars claims arising out of the same transaction that plaintiff could have brought but did not.” Bergeron v. Busch, 228 Mich.App. 618, 579 N.W.2d 124, 126 (1998). Here, DCH contends, PhRMA could have brought its Supremacy Clause claims in Michigan state court and, in fact, did originally bring its Commerce Clause challenge in that forum. Accordingly, DCH argues, the decision by the Michigan Court of Appeals forecloses PhRMA’s ability to bring federal claims against DCH in this Court. The Court is not so persuaded. As an initial matter, although the decision by the Michigan Court of Appeals was issued pri- or to DCH’s cross-motion for summary judgment and its reply thereto, DCH did not raise res judicata as a defense until it submitted its opposition to PhRMA’s motion for leave to amend. At the February 5, 2003, summary judgment hearing, counsel for DCH essentially conceded that DCH’s res judicata argument could have been raised earlier. See Tr. of Feb. 5, 2003, Hearing at 120. Thus there is at least some question as to whether a defense based on res judicata has been waived. See Poulin v. Bowen, 817 F.2d 865, 869 (D.C.Cir.1987) (“Res judicata must be pleaded as an affirmative defense. Failure to so plead constitutes a waiver of the defense.”). In addition, the decision and order by the Michigan Court of Appeals was interlocutory in nature because the court considered PhRMA’s claims only in the context of a motion for a preliminary injunction and concluded only that PhRMA was not likely to prevail on the merits. PhRMA v. DCH, 254 Mich.App. 397, 657 N.W.2d 162, 169 (2002). In fact, the court remanded the matter to the trial court for further proceedings, id., and this Court has not been advised that any final determination on the merits has yet been made. It is thus doubtful that the Michigan Court of Appeals’ decision operates as res judicata upon this Court, despite the admittedly conclusive tone of the court’s opinion. See Univ. of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981) (“[F]indings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits.”); Cmty. Nutrition Inst. v. Block, 749 F.2d 50, 56 (D.C.Cir.1984) (“[A] tentative assessment made to support the issuance of a preliminary injunction pending resolution of the issue ... is not even law of the case, much less res judicata in other litigation”); Kuzinich v. County of Santa Clara, 689 F.2d 1345, 1350-51 (9th Cir.1983) (“[IJssues litigated in a preliminary injunction action are not res judicata and do not form a basis for collateral estoppel.”). Given the generous standard for permitting amendment of complaints under Fed. R.Civ.P. 15(a), the Court will not bar PhRMA from amending its complaint based upon a dubious res judicata argument that was not even raised in DCH’s cross-motion for summary judgment. IV. Claims Against the Federal Defendants With the preliminary issues resolved, the Court may proceed to consider the merits of the five claims asserted against the Federal Defendants. These claims are each brought under the APA, which requires that the Court “hold unlawful and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2). A. “Illegal Formulary” PhRMA and NUIC claim that DCH has created a “formulary” under 42 U.S.C. § 1396r-8(d)(4) but has failed to comply with the requirements specified in that provision. Section 1396r-8(d)(4) provides in relevant part: A State may establish a formulary if the formulary meets the following requirements: (A) The formulary is developed by a committee consisting of physicians, pharmacists, and other appropriate individuals appointed by the Governor of the State .... (B) Except as provided in subparagraph (C), the formulary includes the covered outpatient drugs of any manufacturer which has entered into and complies with an agreement under subsection (a) of this section .... (C) A covered outpatient drug may be excluded with respect to the treatment of a specific disease or condition for an identified population (if any) only if, based on the drug’s labeling ... the excluded drug does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcome of such treatment for such population over other drugs included in the formulary and there is a written explanation (available to the public) of the basis for the exclusion. (D) The State plan permits coverage of a drug excluded from the formulary ... pursuant to a prior authorization program that is consistent with paragraph (5). (E) The formulary meets such other requirements as the Secretary may impose in order to achieve program savings consistent with protecting the health of program beneficiaries. A prior authorization program established by a State under paragraph (5) is not a formulary subject to the requirements of this paragraph. 42 U.S.C. § 1396r-8(d)(4). Because, under subpart (D) of this provision, any drug excluded from a formulary must be offered under a prior authorization program, PhRMA argues that a “formulary” by definition is a “list of drugs for which Medicaid reimbursement will automatically be provided without requiring physicians to undergo the cumbersome procedure of ‘prior authorization.’ ” Mem. Supp. PL’s Mot. Prelim. Inj. at 1. Here, PhRMA contends, because DCH requires prior authorization for all drugs on the MPPL that are not “best in class” or priced favorably compared to the relevant “best in class” drugs, it has essentially created a formulary — a list of drugs subject to prior authorization. However, DCH has not, PhRMA argues, followed the rigorous requirements for for-mularies because, among other things, it excludes drugs from its formulary based upon price, rather than solely upon the absence of a “clinically meaningful therapeutic advantage,” 42 U.S.C. § 1396r-8(d)(4)(C), and because DCH has not offered a written explanation for its exclusion of particular drugs, as required by subpart (C). The Federal Defendants disagree. Pointing to the language in § 1396r-8(d)(4) stating that “[a] prior authorization program established by a State under paragraph (5) is not a formulary,” they argue that DCH’s plan creates a prior authorization program under paragraph (5), not a formulary, and that the plan was approved by the Secretary on that basis. Although every drug excluded from a formulary must be available through a prior authorization program,, the Federal Defendants explain, not every list of drugs requiring prior authorization is necessarily a formu-lary. Moreover, they assert, a “formu-lary” and a “prior authorization” program are inherently different; “[w]hile the for-mulary provision is intended to allow states to categorically exclude drugs from coverage only for a therapeutic reason, prior authorization is to review any request for prescription drug coverage for any reason at all.” Fed. Defs.’ Mem. Supp. Mot. Summ. J. at 8. In this instance, the Federal Defendants argue, DCH’s program is a prior authorization program, nothing more. It does not purport to exclude drugs consistent with the “very specific requirements” for for-mularies in § 1396r-8(d)(4)(C). Fed. Defs.’ Am. Opp. Mot. Prelim. Inj. at 21. Moreover, the Federal Defendants assert, DCH’s program undoubtedly complies with the limited requirements for prior authorization programs contained at § 1396r-8(d)(5): A State plan under this subchapter may require, as a condition of coverage or payment for a covered outpatient drug for which Federal financial participation is available in accordance with this section, with respect to drugs dispensed on or after July 1, 1991, the approval of the drug before its dispensing for any medically accepted indication ... only if the system providing for such approval'— (A) provides response by telephone or other telecommunication device within 24 hours of a request for prior authorization; and (B) except with respect to the drugs on the list referred to in paragraph (2), provides for the dispensing of at least 72-hour supply of a covered outpatient prescription drug in an emergency situation (as defined by the Secretary). 42 U.S.C. § 1396r-8(d)(5) (the “24/72 hour requirements”). DCH, for its part, provides yet a third gloss on how its program fits within the framework of § 1396r-8(d). In DCH’s view, a “formulary” under § 1396r-8(d)(4) is not, as PhRMA contends, a list of drugs available under Medicaid without prior authorization; rather, it is “simply a list of drugs that a state agrees will be eligible for reimbursement under its Medicaid program.” Intervenor-Def.’s Opp. Pl.’s Mot. Prelim. Inj. at 15. The MPPL, DCH asserts, is clearly a “formulary” in this sense — -it lists all drugs eligible for reimbursement,