What’s Happening With the Medicare Drug-Price Negotiation Lawsuits?

Over the past year, drugmakers and lobbyists have filed 10 different lawsuits against the federal government’s efforts to lower prescription drug costs via the Medicare Drug Price Negotiation Program.

It’s still early days for these cases, but so far the government has won “every substantive motion,” Zachary Baron, JD, of the O’Neill Institute for National and Global Health Law at Georgetown University Law Center in Washington, D.C., told MedPage Today.

Baron said the industry would like to see their fight continue in the appellate court and ultimately reach the Supreme Court.

Congress passed the Inflation Reduction Act (IRA) in 2022, granting Medicare the authority to negotiate the price of some of the most costly single-sourced, brand-name drugs. In August 2023, CMS announced the first 10 drugs to be negotiated, including blood thinners and treatments for diabetes, arthritis, heart disease, and leukemia. In February, CMS sent initial offers to drug manufacturers. As of March 4, the manufacturers have submitted counteroffers.

If the price-negotiation program stays on track, CMS will publish the maximum fair prices that the agency has negotiated by September 1, and those negotiated prices are expected to take effect on Jan. 1, 2026.

Here’s an update on where the legal challenges stand.

One Denial, One Drop

On March 1, a Delaware federal district court judge denied a legal challenge from AstraZeneca.

In his opinion, Chief Judge Colm F. Connolly rejected AstraZeneca’s claim that the negotiation program’s incentives are akin to a “gun to the head.”

“It is a potential economic opportunity that AstraZeneca is free to accept or reject,” Connolly wrote in a 47-page opinion. The company’s drug dapagliflozin (Farxiga) — approved for type 2 diabetes, heart failure, and chronic kidney disease — is included on the list for negotiation.

Connolly stressed that AstraZeneca’s participation in Medicare is voluntary and therefore the company does not have “a protected property interest in selling drugs to the Government at prices the Government will not agree to pay.”

The goal of the program is to lower the prices of commonly used high-cost drugs in Medicare that lack competition, he noted.

“Understandably, drug manufacturers like AstraZeneca don’t like the IRA. Lower prices mean lower profits,” Connolly wrote.

In September 2023, Astellas voluntarily dropped its case when CMS named the 10 drugs selected for negotiation, and its prostate cancer drug, enzalutamide (Xtandi), was not on the CMS list.

‘Tantamount to Extortion’

On March 7, Bristol Myers Squibb, Novartis, Novo Nordisk, and Janssen presented their arguments before a New Jersey federal judge.

Altogether, the companies represent six of the 10 drugs selected for negotiation: apixaban (Eliquis), sacubitril/valsartan (Entresto), insulin aspart injection (NovoLog, among others), ustekinumab (Stelara), ibrutinib (Imbruvica), and rivaroxaban (Xarelto).

They argued that allowing Medicare to negotiate prices could hurt investment, and lead to fewer new, innovative therapies. One of the drug manufacturer’s attorneys likened withdrawing from Medicare and Medicaid programs — one option for companies that choose not to participate — to asking for an “arm” from the companies. But Judge Zahid N. Quraishi appeared unmoved, according to STAT.

“A lot of people would say pharmaceutical companies could give up an arm. They have a lot of appendages,” Quraishi said. Without more information on companies’ executive compensation packages and their advertising dollars, their argument is difficult to weigh, he added.

All four drug companies are currently awaiting decisions, according to the O’Neill Institute’s litigation tracker.

Merck and Boehringer Ingelheim — which make sitagliptin (Januvia) and empagliflozin (Jardiance) on CMS’s list, respectively — have argued that the IRA violates the First Amendment, in that it compels them to endorse speech they disagree with — namely that a true negotiation is occurring.

In its complaint, Merck characterizes the negotiation as “tantamount to extortion.”

Both companies also argued that the IRA and negotiation program violated the Fifth Amendment’s Takings Clause by allegedly forcing manufacturers to allow their private property to be “taken for public use, without just compensation.” Bristol Myers Squibb, Janssen, and Novartis made similar arguments.

Merck is currently awaiting a decision from a D.C. court; Boehringer Ingelheim’s briefing is ongoing, according to the litigation tracker.

Trade Groups

On September 29, an Ohio judge rejected a request from the U.S. Chamber of Commerce to halt Medicare drug price negotiations ahead of the October 1 deadline by which drugmakers were required to state whether they would participate in negotiations.

In his opinion, U.S. District Judge Michael J. Newman for the Southern District of Ohio wrote that “the Court is not convinced that granting Plaintiffs preliminary injunctive relief will protect them from imminent and irreparable harm,” according to Politico. “Any economic harm — which, on its own, is insufficient to satisfy this prong of a preliminary injunction analysis — will not occur for years in the future.”

The judge, however, also rejected a Department of Justice request to dismiss the case.

The briefing is ongoing, according to the litigation tracker.

On February 12, a Texas judge dismissed a lawsuit brought by the Pharmaceutical Research and Manufacturers of America (PhRMA) and its co-plaintiffs.

In the complaint, PhRMA argued that the excise tax for noncompliance with the program, “functions as a penalty” and is “grossly disproportionate to the ‘offense’ it seeks to punish: a manufacturer’s unwillingness to agree to a government-mandated price.”

Senior U.S. Judge David Ezra of the Western District of Texas, said that the court lacked jurisdiction to hear the plaintiffs’ claims.

The plaintiffs, including the National Infusion Center Association, and the Global Colon Cancer Association, appealed the decision in March and that briefing is ongoing.

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