A federal court in Delaware has affirmed a significant law that mandates certain pharmaceutical companies to negotiate drug prices with the U.S. government’s Medicare program.
This ruling, made by U.S. District Judge Colm Connolly, counters AstraZeneca‘s challenge against a pivotal element of President Joe Biden’s policy agenda.
The decision was timely, preceding AstraZeneca’s scheduled response to the government’s initial price proposal for its widely-used diabetes medication, Farxiga.
U.S. Health and Human Services Secretary Xavier Becerra welcomed the verdict, stating, “Today’s ruling offers more reason for optimism that we will drive down the cost of prescription drugs in America.”
Conversely, AstraZeneca expressed disappointment, emphasizing the lawsuit’s importance for ensuring access to vital medications and safeguarding the company’s interests.
This legal victory represents the third successful defense of the Biden administration’s price negotiation strategy.
Instituted under the 2022 Inflation Reduction Act, this strategy empowers the Centers for Medicare and Medicaid Service (CMS) to negotiate prices for select, expensive drugs.
The CMS disclosed a list of ten drugs earmarked for the first negotiation round, including notable treatments such as Eliquis, Januvia, and Xarelto.
Pharmaceutical companies resisting participation face severe penalties or the possibility of exclusion from Medicare, a critical market serving 66 million Americans, primarily those over 65.
The industry has contested the program, arguing it infringes on their constitutional rights by mandating drug sales at prices not mutually agreed upon.
Judge Connolly, however, dismissed these arguments, clarifying that companies like AstraZeneca cannot expect to sell drugs at unapproved prices, noting, “Understandably, drug manufacturers like AstraZeneca don’t like the IRA.
Lower prices mean lower profits. … But AstraZeneca’s ‘desire’ or even ‘expectation’ to sell its drugs to the government at the higher prices it once enjoyed does not create a protected property interest.”
This ruling follows similar decisions in Ohio and Texas, where judges also upheld the law against challenges from influential industry and business groups.
All judges involved were appointed by Republican presidents, underscoring the bipartisan judicial support for the law.
The ongoing legal battles are anticipated to escalate to federal appeals courts and possibly the Supreme Court.
If the negotiation process proceeds as planned, the first adjusted drug prices are expected to be established in September and implemented by 2026, aiming for annual savings of $25 billion by 2031.
Analysts predict that the discounts achieved through negotiations could range significantly, from a minimum of 25% to as much as 60%.