In a significant legal battle unfolding in Philadelphia, lawyers representing AstraZeneca, Bristol Myers Squibb, and Johnson & Johnson’s Janssen unit are urging a federal appeals court to revive their lawsuits against the groundbreaking U.S. law that mandates pharmaceutical companies to negotiate drug prices with Medicare. This program, part of the Inflation Reduction Act championed by President Joe Biden, is poised to affect approximately 66 million Americans who rely on Medicare for their healthcare needs.
The law’s first round of negotiations has already targeted ten high-cost medications, including AstraZeneca’s diabetes treatment Farxiga, Bristol Myers’ blood thinner Eliquis, and Janssen’s Xarelto. These drugs have seen price reductions ranging from 56% to 68%, with projections indicating that Medicare could save around $6 billion in the initial year of implementation starting in 2026.
The pharmaceutical companies argue that this program constitutes an unconstitutional taking of their property without compensation. Their legal representatives contend that the law effectively leaves them with no choice but to negotiate under duress, likening it to a “gun to the head.” If they refuse to comply, they face steep fines or the risk of exclusion from the Medicare market, which represents nearly half of all prescription drug sales.
During Wednesday’s court proceedings, Yaakov Roth of Jones Day articulated Bristol Myers’ position before a three-judge panel of the 3rd U.S. Circuit Court of Appeals. He emphasized that the law undermines the fundamental rights of pharmaceutical companies.
In defense of the program, Catherine Padhi from the U.S. Department of Justice countered that the government is exercising its right to leverage its purchasing power for public benefit, asserting that it offers a fair deal to the plaintiffs.
Additionally, Kevin King from Covington & Burling raised concerns about potential First Amendment violations, arguing that the law forces companies to endorse a “maximum fair price,” which they may not deem fair. Padhi responded by clarifying that “maximum fair price” is a defined legal term rather than a subjective valuation.
The panel, comprising Circuit Judges Thomas Hardiman, Peter Phipps, and Arianna Freeman, did not reveal their stance during the hearing. Judge Hardiman remarked on the delicate balance between government leverage and pharmaceutical interests, suggesting that while the program aims to address soaring federal budget deficits, drugmakers cannot expect to benefit from government purchasing power while simultaneously resisting price negotiations.
Despite previous setbacks in their legal challenges against this pricing initiative, drugmakers remain undeterred. Notably, a recent ruling from the 5th U.S. Circuit Court of Appeals has revived a lawsuit by the Pharmaceutical Research and Manufacturers of America (PhRMA), signaling ongoing contention within this critical sector.
As this legal saga unfolds, all eyes will be on how it shapes the future landscape of drug pricing and access in America.
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