Judge Denies AstraZeneca’s Challenge to Medicare’s Negotiation of Drug Prices

A federal judge declined AstraZeneca’s legal challenge against Medicare’s newfound authority to negotiate prices for specific high-cost prescription medications with manufacturers.

The ruling marks another legal victory for the Biden administration amidst an ongoing legal clash with the pharmaceutical sector regarding the constitutionality of these pricing negotiations. Central to the Inflation Reduction Act, these negotiations represent a pivotal policy endeavor aimed at enhancing medication affordability for seniors, potentially impacting pharmaceutical companies’ profits.

Although this ruling favors the administration, the legal battle is far from concluded, with manufacturers indicating their intent to escalate the matter to the Supreme Court. The judge’s decision arrives just before a critical deadline, as manufacturers of the initial ten selected drugs for negotiation, including AstraZeneca’s Farxiga, have until Saturday to respond to Medicare’s initial price proposals for their treatments. Final negotiated prices for this first batch of drugs are slated to take effect in 2026.

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The ruling favors the Biden administration in an ongoing legal battle with the pharmaceutical industry.

In a comprehensive 47-page opinion, U.S. District Judge Colm Connolly of the District of Delaware highlighted that AstraZeneca failed to pinpoint a constitutionally protected property that would be jeopardized by the pricing negotiations.

He emphasized that AstraZeneca’s engagement in the Medicare market is voluntary, dismissing the notion that the company’s desire or anticipation to vend its drugs to the government at previous higher prices establishes a protected property interest.

Connolly underscored the significant incentive for manufacturers to engage in price negotiations with the government, given the expansive market encompassing more than 49 million Medicare and Medicaid beneficiaries. He refuted AstraZeneca’s contention that participation amounted to coercion, emphasizing it as a discretionary economic opportunity.

In response, AstraZeneca expressed disappointment with the court’s ruling and its potential adverse effects on patient access to future life-saving medications. The company indicated it is assessing its options moving forward.

supreme court
Manufacturers intend to escalate the issue to the Supreme Court; legal wrangling continues.

AstraZeneca’s lawsuit argued that the negotiations would compel the sale of medications at substantial discounts, below market rates, violating due process under the Fifth Amendment, which mandates reasonable compensation for private property taken for public use.

This ruling adds to the setbacks faced by the pharmaceutical industry, which has lodged numerous lawsuits challenging the constitutionality of these negotiations. It follows a recent decision by a federal judge in Texas to dismiss a separate lawsuit contesting the pricing talks. Another federal judge in Ohio previously denied a preliminary injunction sought by the Chamber of Commerce, a prominent lobbying entity, to halt the negotiations before October 1.

While some cases remain pending, on March 7, Bristol Myers Squibb, Novo Nordisk, Novartis, and Johnson & Johnson will present their oral arguments to a federal judge in New Jersey during the same hearing.

Jackson Kelley
Jackson Kelley
Jackson is a political activist and market expert. He covers the impact of politics on the market and global economy.
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