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Judge rejects AstraZeneca challenge to Medicare drug price negotiations


Activists protest prescription drug prices in front of the U.S. Department of Health and Human Services building in Washington, DC, October 6, 2022.

Anna Moneymaker | Getty Images

A federal judge on Friday rejected AstraZenecaThe legal challenge to Medicare’s new authority to negotiate prices of certain expensive prescription drugs with manufacturers.

The decision is another victory for the Biden administration in a bitter legal battle with the pharmaceutical industry over the constitutionality of these price negotiations. The negotiations are a key policy under the Inflation Reduction Act, which aims to make drugs more affordable for seniors and could cut into the pharmaceutical industry’s profits.

The legal wrangling over this policy is far from over. The manufacturers have announced their intention to take the case to the Supreme Court.

The judge’s decision came a day before a crucial deadline in the process.

Manufacturers of the first 10 drugs selected for negotiations have until Saturday to respond to Medicare’s initial price offer for their treatments. These drugs include AstraZeneca’s Farxiga, 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. Judge Colm Connolly of the District of Delaware said AstraZeneca failed to identify constitutionally protected property that would be jeopardized 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 higher prices it once enjoyed does not create of protected property interest”.

The ability to sell drugs to more than 49 million Medicare and Medicaid beneficiaries is a “powerful incentive” for manufacturers to participate in price negotiations with the government, Connolly wrote. But he said the incentive was not “a gun to the head” as AstraZeneca claims in its complaint.

“This is a potential economic opportunity that AstraZeneca is free to accept or reject,” Connolly wrote.

In a statement, AstraZeneca said it was “disappointed by the court’s decision and the potential negative impact it will have on patients’ access to future life-saving medicines.” The company said it was evaluating the path forward.

AstraZeneca’s lawsuit claimed the negotiations would force it to sell drugs at deeply discounted prices, below market prices. The company claimed this violated due process under the Fifth Amendment, which requires the government to pay reasonable compensation for private property taken for public use.

The judge’s ruling is another blow to the pharmaceutical industry, which has filed a series of lawsuits claiming the negotiations were unconstitutional.

The ruling comes a month after a federal judge in Texas launched a separate lawsuit challenging price negotiations.

A federal judge in Ohio also issued a ruling in September denying a preliminary injunction requested by the Chamber of Commerce, one of the nation’s largest lobbying groups, which aimed to block price negotiations before October 1.

But many other cases are still pending. On March 7, Bristol Myers Squibb, Novo Nordisk, Novartis and Johnson & Johnson will present their arguments before a federal judge in New Jersey at the same hearing.

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