Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

US judge upholds Medicare drug price negotiation program

Published 03/01/2024, 11:59 AM
Updated 03/01/2024, 02:35 PM
© Reuters. FILE PHOTO: Pharmaceutical tablets and capsules are arranged in the shape of a U.S. dollar sign on a table in this picture illustration taken in Ljubljana August 20, 2014. REUTERS/Srdjan Zivulovic/File Photo

By Brendan Pierson

(Reuters) -A federal judge in Delaware on Friday upheld a law that requires some drugmakers to negotiate prices with the U.S government's Medicare health insurance program, rejecting a challenge by AstraZeneca (NASDAQ:AZN) to one of Democratic President Joe Biden's signature initiatives.

U.S. District Judge Colm Connolly's decision comes the day before the British drugmaker is due to respond to the U.S. government's initial bid for the price of its blockbuster diabetes drug Farxiga.

"Today's ruling offers more reason for optimism that we will drive down the cost of prescription drugs in America," U.S. Secretary of Health and Human Services Xavier Becerra said in a statement.

AstraZeneca said it was disappointed in the ruling and evaluating its path forward. It said its lawsuit was "necessary to support and improve patients' access to future life-saving medicines, and our rights as a company."

The ruling marks the third time the Biden administration's program has survived a court challenge.

The negotiation program, passed as part of 2022's Inflation Reduction Act (IRA), allows the U.S. Centers for Medicare and Medicaid Service (CMS), which oversees Medicare, to negotiate prices for selected high-cost drugs. The agency announced 10 drugs in August that would be the first to be subject to the negotiations.

Drugmakers that refuse to participate must either pay heavy fines or withdraw altogether from Medicare, which covers 66 million Americans mostly aged 65 and older and accounts for a large share of U.S. prescription drug spending.

Manufacturers and industry groups filed lawsuits challenging the program on several grounds, including that it took away their property rights without due process, in violation of the U.S. Constitution.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Connolly, rejecting that argument, wrote on Friday that drugmakers are not "entitled to sell the government drugs at prices the government won't agree to pay."

"Understandably, drug manufacturers like AstraZeneca don't like the IRA," he wrote. "Lower prices mean lower profits. ... But AstraZeneca's 'desire' or even 'expectation' to sell its drugs to the government at the higher prices it once enjoyed does not create a protected property interest."

Other drugs chosen for the first round of negotiations include Bristol-Myers Squibb (NYSE:BMY) and Pfizer (NYSE:PFE)'s blood thinner Eliquis, Merck & Co's diabetes drug Januvia and Johnson & Johnson (NYSE:JNJ)'s blood thinner Xarelto. The government's initial bids were not public.

A federal judge in Ohio last September refused to block the law in a case brought by the U.S. Chamber of Commerce, the nation's largest business lobbying group.

Another federal judge in Texas last month dismissed a similar lawsuit brought by the Pharmaceutical Research and Manufacturers of America (PhRMA), the largest U.S. drug industry lobbying group.

Connolly and the judges in the two previous decisions were all appointed by Republican presidents.

The cases are expected to reach federal appeals courts and possibly the U.S. Supreme Court.

If the price negotiations are allowed to go forward, the first negotiated prices would be set in September and go into effect in 2026, with more drugs added in future years. The IRA aims to save $25 billion annually by 2031.

Industry analysts have said that the negotiated discounts could be steep, ranging from the statutory minimum of 25% to as much as 60%.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Latest comments

Bidenomics leading to lower Rx prices for US taxpayers!
  Not bs, Trump did.  It's well-corroborated by many retrumplicans and Trump himself.
Yes, the GOP listened to Trump when he told them that the gabage deal the Democrats put out would GUARANTEE that the border crisis would continue. Once again, Biden could shut down the border right now, without new legislation. He doesn’t want to do that, because he WANTS to flood this country with illegals.
  There is no declared national health emergency under which Biden can impose temporary border restrictions.  Even with covid-19 pandemic, the court ruled against some of Trump's restrictions.  Stop spewing bs and criticizing Biden for wanting to be law-abiding and bi-partisan, for not being the dictator Trump was..
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.