Medicare drug negotiation program sidesteps key legal hurdle

The judge overseeing Dayton Area Chamber of Commerce et al. v. Becerra et al. has ruled against a preliminary injunction that would stop the Inflation Reduction Act’s pricing provision in its tracks.

Drug companies hoped the Trump-appointed judge would side with them, staving off a program they deem unfair, costly and unconstitutional. President Joe Biden, federal agencies, AARP and other interests believe the program won’t stifle innovation and will instead lead to lower prices for lifesaving drugs in the face of drug prices rising faster than the rate of inflation.

Since participation in Medicare is voluntary, although hugely incentivized, the judge determined that it is within the Centers for Medicare & Medicaid Services’ (CMS') rights to follow through with the negotiation program.

"As there is no constitutional right (or requirement) to engage in business with the government, the consequences of that participation cannot be considered a constitutional violation," said Judge Michael Newman, per Reuters.

While it’s not the end of the litigation surrounding the provision, as Novo Nordisk added its name to the list of drug companies suing the U.S. Department of Health and Human Services on Sept. 29, the judge’s decision is potentially an indication of how other lawsuits could proceed.

Drug companies had until Oct. 1 to agree to negotiations with CMS, withdraw from Medicare or face harsh excise taxes, leaving drug companies with no real alternative. Despite pursuing ongoing legal challenges, all 10 drugs selected in the inaugural list are agreeing to participate in negotiations, CMS officially announced Oct. 3.

“Today is a big win for our nation’s seniors and their ability to afford life-saving medications,” said Frederick Isasi, executive director of Families USA, a coalition of healthcare consumer interests. “Drug companies are throwing everything they’ve got at blocking fair prices. Today’s ruling is a major blow to one of the efforts of the Chamber of Commerce and big drug companies to defend their greed over the health of our nation’s seniors.”

“Pausing Medicare negotiations would have risked billions of dollars in savings for taxpayers – and countless lives,” said William Alvarado Rivera, senior vice president for litigation at the AARP Foundation, in a statement. “It is unconscionable that Americans face such high prescription drug costs that many people skip taking medication altogether or must ration it.”

CMS announced on Aug. 29 the list of 10 drugs that would be subject to the Medicare price negotiations. It included blood clot prevention drugs Eliquis and Xarelto and diabetes drugs Jardiance and Januvia.

The chamber must now file an amended complaint by Oct. 13, and the Department of Justice would have until Oct. 27 to review, according to Politico.