Activists protest prescription drug prices in front of the US Department of Health and Human Services building in Washington, D.C., on October 6, 2022.
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A federal judge refused on Friday AstraZenecaLegal challenge to Medicare's new authority to negotiate prices for certain expensive prescription drugs with manufacturers.
The decision is another victory for the Biden administration in a bitter legal battle with the drug industry over the constitutionality of those price talks. The negotiations are a key policy under the inflation-reducing law that aims to make drugs more affordable for seniors and could reduce pharmaceutical industry profits.
The legal debate over this policy is far from over. The manufacturers said they intend to take the case to the Supreme Court.
The judge's decision came one day before a crucial deadline in the process.
The top 10 drug manufacturers selected for negotiations have until Saturday to respond to Medicare's initial bid for their treatments. These drugs include AstraZeneca's Farxiga, which is used to treat type 2 diabetes, chronic kidney disease and heart failure.
Final negotiated prices for the first round of drugs will take effect in 2026.
In a 47-page opinion, U.S. District Judge Colm Connolly of the District of Delaware said AstraZeneca had not identified constitutionally protected property that would be jeopardized by the price talks.
AstraZeneca's participation in the Medicare market is voluntary, he wrote, so the company's “desire” or even “expectation” to sell its drugs to the government “at the higher prices it once enjoyed does not create a protected property interest.”
The opportunity to sell drugs to more than 49 million Medicare and Medicaid beneficiaries represents a “strong incentive” for manufacturers to engage in pricing talks with the government, Connolly wrote. But he said the incentive was not a “gun to the head” as AstraZeneca claims in its suit.
“It is a potential economic opportunity that AstraZeneca is free to accept or reject,” Connolly wrote.
AstraZeneca said in a statement that it was “disappointed by the court's decision and the potential negative impact it will have on patients' access to life-saving medicines in the future.” The company said it is evaluating its path forward.
AstraZeneca's lawsuit claimed the talks would force it to sell drugs at deep discounts, below market prices. The company asserted that this violates due process under the Fifth Amendment, which requires the government to pay reasonable compensation for private property seized for public use.
The judge's decision is another blow to the pharmaceutical industry, which has filed a series of lawsuits claiming that the negotiations are unconstitutional.
The ruling comes a month after a federal judge in Texas filed a separate lawsuit challenging the price talks.
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 October 1.
But many other issues remain pending. On March 7, Bristol-Myers Squibb, Novo Nordisk, Novartis, and Johnson & Johnson will present their oral arguments to a federal judge in New Jersey at the same hearing.
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