Activists protest the cost of prescription drugs in front of the US Department of Health and Human Services building in Washington, DC on October 6, 2022.
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A federal judge on Friday refused AstraZenecalegal challenge to Medicare’s new power to negotiate prices of some costly prescription drugs with manufacturers;
The ruling is another victory for the Biden administration in a bitter legal battle with the drug industry over the constitutionality of those price talks. Negotiations are a key policy in its context Inflation Reduction Act which aims to make drugs more affordable for the elderly and could take a bite out of the pharmaceutical industry’s profits.
The legal battle over the policy is far from over. The manufacturers said they intend to escalate the matter in the Supreme Court.
The judge’s decision came a day before a critical deadline for the process.
The makers of the first 10 drugs selected for negotiations have until Saturday to match Medicare’s initial price offer for their treatments. These drugs include AstraZeneca’s Farxiga, which is 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. District Judge Colm Connolly of the District of Delaware said AstraZeneca has not identified a constitutionally protected property that would be jeopardized by price discussions.
He wrote that AstraZeneca’s participation in the Medicare market is voluntary, so the company’s “willingness” or even “expectation” to sell its drugs to the government “at the higher prices it once enjoyed does not create a protected property interest.”
The opportunity to sell drugs to more than 49 million Medicare and Medicaid beneficiaries is a “strong incentive” for manufacturers to participate in price talks with the government, Connolly wrote. But he said the motive is not a “gun to the head” as AstraZeneca claims in its suit.
“It is a potential financial opportunity that AstraZeneca is free to accept or reject,” Connolly wrote.
In a statement, AstraZeneca said it was “disappointed with the court’s decision and the potential negative impact it will have on patient access to future life-saving medicines.” The company said it is evaluating its path forward.
AstraZeneca’s lawsuit alleged the talks would force it to sell drugs at huge discounts, 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 decision is another blow to the drug industry, which has filed a slew of lawsuits claiming the deals are unconstitutional.
The ruling comes a month after a federal judge in Texas filed a separate lawsuit challenging the price talks.
A federal judge in Ohio also issued a ruling in September denying a preliminary injunction sought by the Chamber of Commerce, one of the largest lobbying groups in the country. which aimed to block price talks 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 oral arguments to a federal judge in New Jersey at the same hearing.
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