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A federal judge in New Jersey declined Monday Johnson & Johnsonof and Bristol Myers Squibblegal challenges to the Biden administration’s Medicare drug price negotiations, which ruled the program constitutional.
The ruling is another victory for the White House in a bitter legal battle with several drugmakers over price talks. The decision also weakens the drug industry’s strategy of seeking split rulings in lower courts across the US, which could escalate the issue to the Supreme Court.
Medicare drug price negotiations are a key policy under President Joe Biden’s Inflation Reduction Act, which aims to make costly drugs more affordable for seniors. That way, he could take a bite out of drugmakers’ profits. The final negotiated prices for the first round of drugs under the talks, which include one each from J&J and Bristol Myers, will take effect in 2026.
J&J plans to appeal the decision, a spokesperson said in a statement to CNBC.
“This is a disappointing decision for patients and America’s leadership in medical innovation,” they added.
Bristol Myers Squibb did not immediately respond to requests for comment on the decision.
In separate lawsuits, the pharmacists argued that the negotiations constitute an unconstitutional government seizure of their drugs and a violation of their right to free speech. They also argued that the talks are an unconstitutional requirement for participation in the Medicaid and Medicare programs.
But Judge Zahid Quraishi of the District of New Jersey wrote in a 26-page opinion that participation in price discussions and Medicare and Medicaid purchases is voluntary.
The negotiations do not require drugmakers to “set aside, hold or otherwise hold any of their drugs” for use by the government or Medicare beneficiaries, he wrote. Quraishi added that the talks do not force manufacturers to transmit or transport physical drugs at a new negotiated price.
“Selling to Medicare may be less profitable than it was before the Program was enacted, but that does not [J&J and Bristol Myers Squibb’s] decision to participate less voluntary,” Quraishi wrote. “For the reasons stated, the Court concludes that the Program does not result in physical receipt or direct appropriation” of drugs by the two drug manufacturers.
J&J, Bristol Myers Squibb, Novo Nordisk and Novartis presented their oral arguments before Quraishi at the same hearing in March.
That same month, a federal judge in Delaware dismissed AstraZeneca’s separate lawsuit challenging the negotiations. In Texas, a third federal judge filed a separate lawsuit in February.
A federal judge in Ohio also ruled in September denying a preliminary injunction sought by the Chamber of Commerce, one of the nation’s largest lobbying groups, aimed at blocking price talks before Oct. 1.