Judge Dismisses AstraZeneca’s Challenge to Medicare Drug Price Negotiation

The judge emphasizes that AstraZeneca’s participation in the Medicare program is ‘a voluntary undertaking.’

An office of British-Swedish multinational pharmaceutical and biopharmaceutical company AstraZeneca is seen in Cheshire, England, in a file photograph. Paul Ellis/AFP via Getty Images

A federal judge in Delaware on Friday denied AstraZeneca’s lawsuit challenging the constitutionality of Medicare’s drug price negotiation program, citing the company’s lack of legal standing.

In his March 1 ruling, U.S. District Judge Colm Connolly stated that the pharmaceutical company lacked standing to challenge the guidance issued by Medicare to implement the program.

The judge also stated that AstraZeneca failed to identify any property interest protected by the constitution that is put in jeopardy by the program.

“AstraZeneca does not say or suggest in any way how its decision-making about other drugs has been or could be negatively affected by the Guidance,” Mr. Connolly stated.

“Nor does it say or suggest in any way how taking the agency’s current policies into account causes it harm as it makes plans to develop and commercialize other drugs,” he added.

Mr. Connolly said that the property interest AstraZeneca claimed merits protection under the Fifth Amendment “is the ability to sell its drugs to Medicare at prices above the ceiling prices and negotiated maximum fair prices established by the IRA (Inflation Reduction Act).”

“No one, however, is entitled to sell the Government drugs at prices the Government won’t agree to pay,” he stated.

“Neither the IRA nor any other federal law requires AstraZeneca to sell its drugs to Medicare beneficiaries,” Mr. Connolly said, noting that AstraZeneca’s participation in the Medicare program is voluntary.

According to him, the Medicare program is essentially designed “to lower the prices of selected drugs that lack generic competition and account for a disproportionate share of Medicare’s expenses.”

“Understandably, drug manufacturers like AstraZeneca don’t like the IRA. Lower prices mean lower profits. Drug manufacturers like AstraZeneca desire the old pricing regime, and they lobbied and perhaps expected Congress not to pass the IRA in 2022,” Mr. Connolly stated.

AstraZeneca said that it was disappointed with the ruling and will be evaluating its path forward.

Biden Administration Hails Ruling

The ruling marks the third time the Biden administration’s program has survived a court challenge. White House Press Secretary Karine Jean-Pierre hailed the ruling “an important victory” for the government.

“While Big Pharma continues to use the courts to try to thwart lower prices for consumers, today’s win is an important victory,” Ms. Jean-Pierre said in a statement.

The Medicare program, passed as part of the Biden administration’s IRA, allows the U.S. Centers for Medicare and Medicaid Service (CMS)—which oversees Medicare—to negotiate prices for selected high-cost drugs.

The agency announced 10 drugs in August 2023 that would be the first to be subject to the negotiations.

President Joe Biden has made lowering the high cost of prescription medicines a key priority during his time in office, with the Democrat regularly taking aim at pharmaceutical companies and accusing them of making “record profits” while leaving American families saddled with sky-high prices and unable to afford life-saving prescription drugs.

The negotiation cycle will involve roughly six months of discussions between the manufacturers and the federal CMS with the final negotiated prices set to take effect in 2026.

However, pharmaceutical companies have pushed back on the negotiations, branding them unconstitutional, and said they were essentially forced to take part in the negotiating process or risk paying steep penalties.

A federal judge in Ohio last September refused to block the law in a case brought by the U.S. Chamber of Commerce, the nation’s largest business lobbying group.

Another federal judge in Texas last month dismissed a similar lawsuit brought by the Pharmaceutical Research and Manufacturers of America (PhRMA), the largest U.S. drug industry lobbying group.

Katabella Roberts and Reuters contributed to this report.