What’s next in the legal fight over Medicare drug price negotiations‍

The legal battle over Medicare drug price negotiations is poised to intensify as stakeholders challenge regulatory changes. Future litigation may center on the authority of federal agencies to implement pricing reforms, potential conflicts with existing laws, and the balance between government oversight and industry interests.

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Good morning! The bitter legal battle over Medicare drug price negotiations is heating up – and so far, it’s looking favorable for the Biden administration. 

So, what’s this fight all about in the first place? It centers around a key provision of President Joe Biden’s Inflation Reduction Act that gives Medicare the power to negotiate prices for costly prescription medicines. The talks aim to make those drugs more affordable for seniors, and will likely take a bite out of pharmaceutical industry profits. 

The Biden administration faces a flurry of lawsuits from drugmakers with medicines selected for the first round of talks. The final negotiated prices of the initial 10 drugs will go into effect in 2026. 

The lawsuits argue the price talks are unconstitutional and must be struck down.

Some of the drugmakers specifically contend the negotiations would force them to sell medicines at huge discounts, below market rates, among other arguments. They assert that 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 clinched a few early wins 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 isn’t entitled to sell its drugs to the government “at any price other than what the government is willing to pay.”
• PhRMA, the pharmaceutical industry’s biggest lobbying group, and two other organizations: A federal judge in Texas last month dismissed the suit, arguing that the court does not have jurisdiction to hear the claims.
• U.S. Chamber of Commerce, one of the nation’s largest lobbying groups: A federal judge in Ohio partially ruled in the case in September, denying a preliminary injunction sought by the Chamber that aimed to block the price talks by Oct. 1. The judge said the group hadn’t demonstrated a “strong likelihood” of succeeding on its claim that the program violates due process. 

“All of the momentum is clearly on the side of the government at this point, and not on the side of some of these other manufacturers,” Theresa Carnegie, a member at Mintz Levin, told CNBC. 

Several cases are still pending, including legal challenges from big names such as Merck and Johnson & Johnson. . Decisions in those cases will likely come by the end of the year, Carnegie noted. 

But she said the rulings we’ve seen so far “are meaningful” for those remaining legal challenges. 

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

Drugmakers have said they aim to escalate their legal fight over Medicare drug price negotiations to the Supreme Court. 

Here’s how: The companies scattered their suits in federal courts around the U.S. Several legal experts have said that the industry hopes to obtain conflicting rulings from federal appellate courts, which could fast-track the issue to the nation’s highest court.

But Carnegie said it’s looking “less and less possible” the legal battle will reach the Supreme Court.

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

Still, “given how handily some of these decisions have come out and how the courts have made these determinations, it doesn’t seem that these issues are creating uncertainty or a circuit split,” Carnegie said.

So, what happens next? Carnegie said drugmakers appear to recognize that their lawsuits may not go the way they want, so they could shift their litigation focus to how the government implements the program.

Drugmakers and trade associations are going to look “for any opportunity to object to the way that the program is being run,” she said.

Feel free to send any tips, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.

Source: CNBC