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Another Administration Win In Medicare Drug Price Negotiation Lawsuits

Litigation surrounding Medicare drug price negotiation between drug manufacturers and the Biden Administration is progressing, with several recent developments. The pharmaceutical industry has initiated legal challenges based on various constitutional, statutory, and agency authority claims, but district court judges have consistently ruled against them. Click here for article.

  • Recent Court Decisions:

  • In New Jersey, Judge Quraishi granted summary judgment motions filed by the Department of Justice (DOJ) in cases brought by Bristol Myers Squibb (BMS) and Janssen Pharmaceuticals. The lawsuits alleged violations of the Fifth Amendment (Takings Clause), First Amendment, and unconstitutional conditions of participation in Medicare/Medicaid. However, the judge rejected these claims and ruled in favor of the Administration.

  • Takings Clause Claim:

  • Judge Quraishi determined that the drug price negotiation program does not constitute a physical taking, and participation in the program is voluntary. He emphasized that the program reflects a valid exercise of Congress's authority to control government spending as a market participant.

  • First Amendment Claim:

  • The companies' claim that the program compelled them to engage in "sham negotiations" was dismissed by Judge Quraishi, who found that the program regulates commercial conduct, not speech. He concluded that the issues faced by the companies were public relations problems, not constitutional ones.

  • Unconstitutional Conditions of Participation Claim:

  • Judge Quraishi also rejected the argument that the program violated the unconstitutional conditions doctrine, as he had already dismissed the underlying claims regarding the First and Fifth Amendments.

  • Fifth Circuit Appeal:

  • PhRMA and allied associations appealed a Texas district court's decision to dismiss their case. Oral arguments before the Fifth Circuit panel focused on technical issues related to the Medicare Act and standing to bring a case. Some judges expressed skepticism about the program's structure and operation.

  • Next Steps:

  • The pharmaceutical industry awaits decisions in the cases brought by Novartis and Novo Nordisk in New Jersey. Despite recent court victories for the Administration, industry continues its legal efforts, with potential implications for the negotiation process scheduled to conclude by August 1, 2024.

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