Activists protest prescription drug pricing outside the US Department of Health and Human Services building in Washington, DC, on October 6, 2022.
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A federal judge on Friday rejected AstraZenecaThe legal challenge to Medicare's new power to negotiate prices of certain expensive prescription drugs with manufacturers.
The decision is another victory for the Biden administration in a bitter legal fight with the pharmaceutical industry over the constitutionality of those pricing talks. The negotiations are a key policy under the Inflation Reduction Act that aims to make drugs more affordable for seniors and could reduce pharmaceutical industry profits.
The legal dispute over this policy is far from over. The manufacturers have said they intend to take the matter to the Supreme Court.
The judge's decision came a day before a crucial deadline in the process.
The makers of the first 10 drugs selected for negotiations have until Saturday to respond to Medicare's initial price offer for their treatments. Those drugs include AstraZeneca's Farxiga, which is used to treat type 2 diabetes, chronic kidney disease and heart failure.
The final negotiated prices for the first round of drugs will take effect in 2026.
In a 47-page opinion, U.S. District Judge Colm Connolly of the District of Delaware said AstraZeneca has not identified constitutionally protected property that could be compromised by price negotiations.
He wrote that AstraZeneca's participation in the Medicare market is voluntary, so the company's “desire” or even “expectation” to sell its drugs to the government “at the highest prices it ever enjoyed does not create an interest protected property.
The opportunity to sell drugs to more than 49 million Medicare and Medicaid beneficiaries is a “powerful incentive” for manufacturers to participate in pricing talks with the government, Connolly wrote. But she said the incentive is not “a gun to the head” as AstraZeneca claims in its lawsuit.
“It is a potential economic opportunity that AstraZeneca is free to accept or reject,” Connolly wrote.
In a statement, AstraZeneca said it is “disappointed with the court's decision and the potential negative impact it will have on patients' access to future life-saving medicines.” The company said it is evaluating its path forward.
AstraZeneca's lawsuit claimed that the talks would force it to sell drugs at deep discounts, below market prices. The company claimed this violates due process under the Fifth Amendment, which requires the government to pay reasonable compensation for private property taken for public use.
The judge's decision is another blow to the pharmaceutical industry, which has filed a flurry of lawsuits alleging that the negotiations are unconstitutional.
The ruling comes a month after a federal judge in Texas dismissed a separate lawsuit challenging the price negotiations.
A federal judge in Ohio also issued a ruling in September denying a preliminary injunction sought by the Chamber of Commerce, one of the country's largest lobbying groups. which aimed to block price talks before October 1.
But many of the other cases are still pending. On March 7, Bristol Myers Squibb, Novo Nordisk, Novartis and Johnson & Johnson will present oral arguments before a federal judge in New Jersey at the same hearing.
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