Astellas withdraws IRA lawsuit after avoiding CMS' price negotiations list

Expecting to be subject to Medicare pricing negotiations, Astellas in July challenged the legality of the Inflation Reduction Act (IRA). But now that the Centers for Medicare & Medicaid Services (CMS) has released the first 10 drugs set for governmental bargaining, the company is ready to abandon its litigation.

When CMS last week revealed its list of the first 10 drugs eligible for Medicare price negotiations, Astellas' Xtandi did not make the cut. This surprised some pharma watchers, who had expected the Pfizer-partnered cancer blockbuster to be among the first drugs to face the controversial new process. 

Now, without Xtandi on the list, Astellas is pulling its lawsuit, Reuters reports.

The 10 drugs on the CMS' list are blockbusters marketed by Johnson & Johnson, Bristol Myers Squibb, Merck & Co., Novartis, Eli Lilly, AstraZeneca, Novo Nordisk and Amgen.

Many of the companies whose drugs made the cut had already filed their own IRA-related litigation. Novartis, for its part, waited for its Entresto to be named before the Swiss drug giant launched its own case.

In its suit, the Swiss company said the negotiation process is a “sham," additionally calling the tax on companies that don’t comply “draconian” and “wildly disproportionate to the punished conduct.”

For its part, Astellas had argued that the drug pricing negotiation program is akin to price-setting and is in violation of the First Amendment, plus the Takings Clause and the Due Process Clause of the Fifth and Fourteenth amendments, respectively.

Analysts at Moody’s Investors Service expected Astellas’ blockbuster prostate cancer drug Xtandi and overactive bladder med Myrbetriq to make the initial list of drugs subject to pricing negotiations in 2026.

While Astellas' case has reached its end, the other litigation is playing out as the government works to usher in the lower prices by the start of 2026. Some legal experts expect the issue to progress all the way to the Supreme Court.

Aside from lawsuits from individal companies, the influential trade group PhRMA and the U.S. Chamber of Commerce have sued the federal government over the IRA.