Courts in Maryland and Washington, D.C., have rejected lawsuits by two pharma giants against the Centers for Medicare & Medicaid Services' (CMS) drug price negotiation program, introduced by former President Joe Biden under the Inflation Reduction Act (IRA).
On Monday, the U.S. Court of Appeals for the Third Circuit in Washington, D.C., ruled against Merck & Co., rejecting its claim that the price negotiations are unconstitutional because they violate the First and Fifth Amendments. The argument is one that has been made by multiple drugmakers pushing back against the program.
The ruling comes five days after a federal court in Maryland dismissed an AstraZeneca lawsuit, which alleged that the government grouped too many of its drugs together to reach a benchmark that made them eligible for the price reduction program.
The losses add to a series of defeats drugmakers have suffered in attempting to challenge the government’s price negotiation rules since they were introduced in 2022.
In May, the U.S. Supreme Court declined to hear cases brought by Johnson & Johnson, Bristol Myers Squibb, Novo Nordisk, Novartis, Boehringer Ingelheim and a previous lawsuit brought by AstraZeneca, after all the challenges had been rejected by lower courts.
Last week, Teva got a rare partial win against the IRA as the federal appeals court in Washington sent (PDF) a previous ruling back to District Court for further review. It concerned Teva’s challenge to the requirements by CMS that a generic drug be genuinely marketed before its brand-name reference product is excluded from negotiation.
The court rejected another challenge brought by Teva, upholding an expected decision by CMS to classify the company’s Huntington’s disease and tardive dyskinesia drug, Austedo, and its extended-release version, Austedo XR, as a single drug.
That Teva lawsuit was similar to the AZ challenge rejected last week by Judge Matthew Maddox.
Meanwhile, Merck’s attempt, which was swatted away by Judge Colleen Kollar-Kotelly, failed to show that the price negotiation program violated the First Amendment by compelling drugmakers to publicly agree with a government edict against their will. The court also determined Merck failed to demonstrate that the government action was a “taking” of private property without just compensation, which would violate the Fifth Amendment.
Kollar-Kotelly ruled that companies are free to determine whether they participate in the program.
Merck was the first company to challenge the price negotiation scheme in 2022. Its drug Januvia was among the first 10 that were selected for eventual inclusion in the program that year.
Monday's decision against Merck was heralded by U.S. advocacy group Patients for Affordable Drugs, whose director of media and communications, Emma Sands, said in a statement that the pharma industry has spent three years and millions of dollars fighting to overturn a program she argued is "overwhelmingly supported by American patients and Taxpayers."
“Again and again, their arguments have failed in the courtroom," she continued. "This is a win for patients who fought for this program and are already seeing the lower prices it delivers.”