The U.S. Court of Appeals for the Fifth Circuit has rejected a major pharmaceutical industry lawsuit challenging Medicare drug price negotiations under the Inflation Reduction Act.
The appeals court affirmed a lower district court ruling that had already rebuffed PhRMA and its co-plaintiffs’ constitutional arguments against the IRA’s pricing provisions.
Judge Leslie Southwick wrote in the opinion that “we conclude that manufacturers lack a protected interest in selling to Medicare beneficiaries at a preferred price because participation in Medicare and Medicaid, and thus in the Program, is voluntary.”
The ruling strikes at one of the pharmaceutical industry’s core arguments, which holds that companies are effectively compelled to participate in what the government describes as voluntary price negotiations.
Southwick cited agreement with a Second Circuit finding, noting: “A company suffers no deprivation of its property interests by voluntarily submitting to a price-regulated government program.”
She acknowledged that the “financial importance to manufacturers of their drugs being available through the Medicare and Medicaid programs is clear,” but said this did not make participation legally involuntary.
The Fifth Circuit panel held that economic hardship does not amount to legal compulsion, drawing a clear boundary between financial pressure and genuine coercion under the law.
PhRMA said it is “reviewing the decision and all options,” according to a spokesperson who responded to a request for comment by email following the ruling.
The trade group originally filed the lawsuit in 2023, alongside the National Infusion Center Association and the Global Colon Cancer Association, arguing the IRA’s provisions violated the Fifth and Eighth Amendments.
The case had a winding procedural history, including an earlier dismissal over venue issues related to the National Infusion Center Association being the only Texas-based plaintiff, before being sent back for a ruling on the merits.
A unanimous panel of judges, appointed respectively by Presidents Bush, Obama, and Trump, ultimately sided against the industry’s constitutional claims in the latest ruling.
The Fifth Circuit’s decision represents the 25th consecutive court ruling in favour of patients and against the pharmaceutical industry in litigation over the Medicare negotiation programme.
The string of legal defeats suggests courts are broadly unwilling to accept the industry’s argument that Medicare negotiation amounts to an unconstitutional taking or an excessive fine.
PhRMA and its partners have so far failed to find traction across multiple circuits, raising questions about the long-term viability of any further legal challenges to the IRA’s pricing framework.