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A federal judge in New Jersey refused on Monday Johnson & Johnson'sand Bristol-Myers SquibbThe Biden administration's legal challenges to Medicare drug price negotiations, ruling the program constitutional.
The decision is another win for the White House in a bitter legal battle with several drugmakers over pricing talks. The ruling also weakens the drug industry's strategy of seeking split decisions in lower courts spread across the United States, which could escalate the case to the Supreme Court.
Negotiating Medicare drug prices is a key policy under President Joe Biden's inflation-reducing law that aims to make expensive drugs more affordable for seniors. In doing so, it may reduce the profits of pharmaceutical companies. Final negotiated prices for the first round of drugs under talks, which includes one each from Johnson & Johnson and Bristol-Myers, will take effect in 2026.
Johnson & Johnson plans to appeal the decision, a company spokesperson said in a statement to CNBC.
“This is a disappointing ruling for patients and America’s leadership role in medical innovation,” they added.
Bristol-Myers Squibb did not immediately respond to requests for comment on the ruling.
In separate lawsuits, drugmakers have argued that the negotiations are an unconstitutional seizure of their drugs by the government and a violation of their right to free speech. They also argued that the talks are an unconstitutional requirement for participation in the Medicaid and Medicare programs.
But Judge Zahid Qureshi of the District of New Jersey wrote in a 26-page opinion that participation in price talks and the Medicare and Medicaid markets is voluntary.
The negotiations do not require drugmakers to “set aside, reserve, or otherwise reserve any of their drugs” for government or Medicare beneficiaries' use, he wrote. Qureshi added that the talks do not force manufacturers to physically transport or move the drugs at a new negotiated price.
“Selling to Medicare may be less profitable than it was before the program was established, but that does not make (J&J and Bristol Myers Squibb's) decision to participate any less voluntary,” Al Quraishi wrote. “For the reasons given, the court concludes that the program does not result in the actual seizure or direct seizure” of drugs from the two drug manufacturers.
Johnson & Johnson, Bristol-Myers Squibb, Novo Nordisk, and Novartis all presented oral arguments before Qureshi during the same hearing in March.
The same month, a federal judge in Delaware dismissed AstraZeneca's separate lawsuit challenging the negotiations. In Texas, a third federal judge filed a separate lawsuit in February.
A federal judge in Ohio also ruled in September denying a preliminary injunction sought by the Chamber of Commerce, one of the country's largest lobbying groups, aimed at derailing price talks before Oct. 1.
