What's next in Medicare drug price negotiations?

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Good day! The bitter legal battle over Medicare drug price negotiations is intensifying and, so far, looks favorable for the Biden administration.

So what is this fight about in the first place? It focuses on a key provision of President Joe Biden's Inflation Reduction Act that gives Medicare the power to negotiate prices for expensive prescription drugs. The talks aim to make those drugs more affordable for older people and will likely reduce the pharmaceutical industry's profits.

The Biden administration faces an avalanche of lawsuits from drugmakers with drugs selected for the first round of talks. The final negotiated prices of the initial ten drugs will take effect in 2026.

The lawsuits argue that the price negotiations are unconstitutional and should be overturned.

Some of the drug makers specifically argue that the negotiations would force them to sell drugs at deep discounts, below market prices, among other arguments. They claim this violates due process under the Fifth Amendment, which requires the government to pay reasonable compensation for private property taken for public use.

But the administration has already scored some early victories in some of the cases.

• AstraZeneca: A federal judge in Delaware earlier this month rejected the drugmaker's lawsuit. That judge said AstraZeneca's due process claim “fails as a matter of law,” noting that the company has no right to sell its drugs to the government “at any price other than what the government is willing to pay.”
• PhRMA, the pharmaceutical industry's largest lobbying group, and two other organizations: Last month, a federal judge in Texas dismissed the lawsuit, arguing that the court does not have jurisdiction to hear the claims.
• United States Chamber of Commerce, one of the largest lobbying groups in the country: A federal judge in Ohio partially ruled in the case in September, denying a preliminary injunction sought by the House that sought to block pricing talks before Oct. 1. The judge said the group had not demonstrated a “strong likelihood” of succeeding in its claim that the program violates due process.

“All the push is clearly on the side of the government right now, and not on the side of some of these other manufacturers,” Mintz Levin fellow Theresa Carnegie told CNBC.

Several cases are still pending, including legal challenges from big names like merck and Johnson and Johnson. Decisions in those cases will likely be made by the end of the year, Carnegie said.

But he said the rulings we've seen so far “are significant” to the pending legal challenges.

“Any judge in other cases will look at previous decisions and that will necessarily influence them in terms of their potential decisions, how they would view them, and they would have to come up with a novel theory or go against it.” Carnegie said. For example, he noted that in two cases courts have already struck down the pharmaceutical industry's due process claims.

Drug makers have said they intend to take their legal fight over Medicare drug price negotiations all the way to the Supreme Court.

Here's how: The companies distributed their lawsuits in federal courts across the United States. Several legal experts have said the industry hopes to get conflicting rulings from federal appeals courts, which could fast-track the matter to the nation's highest court.

But Carnegie said it seems “less and less likely” that the legal battle will reach the Supreme Court.

With three rulings in favor of the Biden administration, the pharmaceutical industry will need a court to take a different position in the coming months to create a “circuit split” that the Supreme Court could agree to review.

Still, “given how well some of these decisions have gone and how the courts have made these determinations, it doesn't appear that these issues are creating uncertainty or a circuit split,” Carnegie said.

So what happens next? Carnegie said drug makers seem to recognize that their lawsuits may not go their way, so they might shift the focus of their litigation to how the government implements the program.

Drug makers and trade associations will look for “any opportunity to object to the way the program is being run,” he said.

Feel free to send any tips, suggestions, story ideas, and facts to Annika at [email protected].

CNBC is present at HIMSS

I'm Ashley, reporting live from Orlando, Florida!

I'm one of over 35,000 people attending the HIMSS Global Health Conference this week and it's shaping up to be a great event. Healthcare executives and professionals from around the world are here to discuss the latest trends in care and cutting-edge technology, and I'll give you everything you need to know from the ground.

I went to HIMSS for the first time last year when it was held in Chicago, and the AI ​​completely stole the show. All that could be talked about was generative AI and its potential, especially since the conference took place a few months after OpenAI's ChatGPT exploded into the public sphere.

I expect AI to be the dominant topic again this year, albeit in a slightly different capacity. Last year, there was a lot of talk about what the technology could one day achieve when companies like Epic Systems, Microsoft, Amazon, and Google announced the first AI applications and partnerships.

This year I think the focus will be on what AI is already achieving in the sector. As the market becomes increasingly saturated with healthcare-specific AI solutions, technology companies must demonstrate that their tools are efficient, effective, and of course, secure, if they want to remain competitive. Game on!

There have already been a couple of notable announcements. Salesforce introduced new AI solutions ahead of HIMSS that could help reduce doctors' administrative workloads by unifying disparate data and automating some manual tasks. Microsoft on Monday announced the formation of the Trustworthy and Responsible AI Network, which will aim to improve the quality and reliability of technology in healthcare, according to a statement. Microsoft's announcement came just a week after the Coalition for AI in Health named its CEO and board of directors, so efforts to regulate the use of AI in health are intensifying.

Aside from the conference, I also learned that Orlando is a major health technology hub in its own right. On Monday I toured three facilities in a part of town called Lake Nona. Here, among gleaming new buildings and palm trees, health systems are testing and developing cutting-edge technologies before rolling them out more broadly. More details on this coming soon.

It's going to be a busy week here, and this New York journalist might even see some sunshine between meetings. What more can I ask for?

Please feel free to send any tips, suggestions, story ideas, or information to Ashley at [email protected].