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A federal judge in New Jersey on Monday rejected Johnson and Johnson'sand Bristol-Myers SquibbLegal challenges to the Biden administration's Medicare drug pricing negotiations, ruling that the program is constitutional.
The decision is another victory for the White House in a bitter legal fight with several drugmakers over price negotiations. The ruling also weakens the pharmaceutical industry's strategy of seeking split decisions in lower courts across the United States, which could take the matter to the Supreme Court.
Medicare drug price negotiations are a key policy of President Joe Biden's Inflation Reduction Act, which aims to make expensive medications more affordable for seniors. Doing so could reduce drug makers' profits. Final negotiated prices for the first round of drugs subject to the talks, which include one from J&J and one from Bristol Myers, will take effect in 2026.
J&J plans to appeal the decision, a spokesperson said in a statement to CNBC.
“This is a disappointing decision for patients and the United States' leadership role in medical innovation,” they added.
Bristol Myers Squibb did not immediately respond to requests for comment on the ruling.
In separate lawsuits, the drugmakers argued that the negotiations are an unconstitutional seizure of their drugs by the government and a violation of their right to free speech. They also argued that the talks are an unconstitutional condition of participation in the Medicaid and Medicare programs.
But Judge Zahid Quraishi of the District of New Jersey wrote in a 26-page opinion that participation in price negotiations and the Medicare and Medicaid markets is voluntary.
The negotiations do not require drug makers to “separate, hold, or otherwise reserve any of their drugs” for use by the government or Medicare beneficiaries, he wrote. Quraishi added that the talks do not oblige manufacturers to physically transmit or transport drugs at a new negotiated price.
“Selling to Medicare may be less profitable than before the institution of the Program, but that does not mean [J&J and Bristol Myers Squibb’s] “The decision to participate is less voluntary,” Quraishi wrote. “For the reasons stated, the Court concludes that the Program does not result in a physical taking or direct appropriation” of drugs from the two drug manufacturers.
J&J, Bristol Myers Squibb, Novo Nordisk and Novartis presented oral arguments before Quraishi during the same hearing in March.
That same month, a federal judge in Delaware rejected AstraZeneca's separate lawsuit challenging the negotiations. In Texas, a third federal judge dismissed a separate lawsuit in February.
A federal judge in Ohio also issued a ruling in September denying a preliminary injunction sought by the Chamber of Commerce, one of the nation's largest lobbying groups, that sought to block price negotiations before Oct. 1.
