J&J, BMS Lose Challenges to Medicare Drug Price Negotiation Program

Judicial gavel

Pictured: Judicial gavel and scales of justice/Courtesy iStock

A federal judge in New Jersey on Monday ruled that the drug price negotiations outlined in the Inflation Reduction Act are constitutional, rejecting the arguments put forth by Johnson & Johnson and Bristol Myers Squibb, multiple news outlets reported late Monday. This is the latest decision in an ongoing legal battle between Big Pharma and the government over the IRA—a battle that continues to go poorly for the biopharma industry.

Judge Zahid Quraishi of the District of New Jersey issued summary judgment against J&J’s Janssen and BMS, dismissing their claim that the Medicare Drug Price Negotiation Program was an unconstitutional taking of their assets.

“In short, Defendants are not taking drugs from Plaintiffs,” Quraishi wrote in his 26-page ruling, according to multiple news outlets. “Selling to Medicare may be less profitable than it was before the institution of the Program, but that does not make Defendants’ decision to participate any less voluntary.”

BMS has already appealed the ruling to the Third Circuit Court of Appeals, Endpoints News reported 

This move was predicted by John Bennett, a Boston-based litigator at Allen & Overy who works with biopharma clients. “All of these cases ultimately have the potential to be appealed, and no doubt will be appealed,” Bennett told BioSpace earlier this year. “I think all of them in one shape or form have the possibility at least of potentially becoming precedent and potentially being argued at the Supreme Court.”

Quraishi did not rule on suits brought by Novartis and Novo Nordisk that were combined into the same hearing with BMS and J&J’s cases. The judge reportedly was skeptical of Novartis and Novo’s arguments during that hearing, which took place March 7.

In February, a federal judge in Texas dismissed the lawsuit from the group Pharmaceutical Research and Manufacturers of America (PhRMA) on the grounds of wrong venue. However, PhRMA and two allies this week announced that they would appeal the ruling to the U.S. Court of Appeals for the Fifth Circuit, Bloomberg Law reported.

Last month, a federal judge in Delaware ruled against AstraZeneca, saying that the Medicare program did not deny the company its right to sell its product. That judgment was in line with another federal court’s denial of an injunction against the IRA program sought by the Dayton (Ohio) Chamber of Commerce last fall. On Monday, AstraZeneca filed an appeal with the Third Circuit.

In October 2023, a court denied the U.S. Chamber of Commerce’s motion for a preliminary injunction against the program, pointing out that the plaintiffs neither had a strong chance of succeeding nor evidence of irreparable harm.

Neil Versel is the business editor at BioSpace. You can reach him at neil.versel@biospace.com. Follow him on LinkedIn or X.

Editor's note: This story has been updated with information about AstraZeneca's appeal.

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