Federal Judge Denies Request to Block Medicare Drug Price Negotiation Program

Gavel on table

Pictured: Brown gavel on a wooden table, with a book in the background/iStock, nathaphat

A federal court judge on Friday denied the U.S. Chamber of Commerce’s bid for a preliminary injunction against the Inflation Reduction Act’s Drug Price Negotiation Program—the first legal test to stop the Biden administration’s implementation of the Medicare cost-cutting initiative.

In his order, Judge Michael Newman of the Southern District of Ohio noted that the plaintiffs demonstrated “neither a strong likelihood of success nor irreparable harm” in their initial lawsuit against provisions of the Inflation Reduction Act (IRA).

The court decision also comes ahead of the Oct. 1 deadline for pharmaceutical companies to register their participation in the IRA program, as set by the Centers for Medicare and Medicaid Services (CMS).

The Chamber of Commerce filed its lawsuit against the Department of Health and Human Services (HHS) in June 2023. In its complaint, the business group challenged the constitutionality of the IRA’s Drug Price Negotiation Program, claiming that it violates “requirements of limited government, property rights, the rule of law, and the separation of powers.”

Also, the Chamber of Commerce contends that the program goes against the Fifth Amendment protection that no private property can be taken by the state for public use without “just compensation.”

However, in his decision, Newman disagreed noting that “to warrant injunctive relief, Plaintiffs must show that no set of circumstances exist where the Program would be constitutionally valid under the Fifth Amendment Due Process Clause,” the judge wrote. “They have not done so.”

In addition, in its lawsuit, the Chamber of Commerce argued that the HHS program leaves pharma companies with “no practical ability” to reject the government’s maximum fair price, making the final negotiated drug prices “in reality confiscatory.”

Newman again challenged this, writing that companies can choose to not participate in the negotiation program. “The Program’s eventual ‘maximum fair price’ cannot be considered confiscatory because pharmaceutical manufacturers who do not wish to participate in the Program have the ability—practical or not—to opt out of Medicare entirely.”

The IRA was signed by President Joe Biden into law last August 2022, with the goal of cutting around $25 billion in government drug spending for the next eight years. In August 2023, CMS named the first 10 drugs that would be covered in the first round of drug price negotiations.

These include some of the most widely prescribed medicines that had among the highest total Part D gross coverage, such as BMS’ blood thinner Eliquis (apixaban), Lilly’s diabetes drug Jardiance (empagliflozin) and J&J’s blood cancer treatment Imbruvica (ibrutinib). In total, from June 2022 to June 2023, these 10 drugs cost the U.S. government around $50 billion, according to a CMS factsheet.

Aside from the Chamber of Commerce, several biopharma companies have opposed the Medicare Drug Price Negotiation Program, including Merck, BMS, J&J, AstraZeneca and Novartis.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. He can be reached at tristan@tristanmanalac.com or tristan.manalac@biospace.com.

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