Supreme Court Declines Pharma Challenge to Biden-Era Medicare Drug Pricing
Supreme Court Decision and Implications for Medicare Drug Pricing
By Andrew Chung
May 18 (Reuters) - The U.S. Supreme Court declined on Monday to hear a pharmaceutical industry challenge to a plan to curb Medicare drug prices adopted during Democratic former President Joe Biden's administration that drugmakers argued illegally forces them to accept steep discounts and jeopardizes innovation.
Pharmaceutical Industry Appeals and Court Rulings
The justices turned away appeals by Novo Nordisk, AstraZeneca, Janssen Pharmaceuticals, Bristol Myers Squibb, Novartis and Boehringer Ingelheim. They left in place decisions by lower courts rejecting various legal claims against the drug price negotiation plan, which was part of Biden's signature Inflation Reduction Act of 2022.
Overview of the Inflation Reduction Act's Drug Pricing Provisions
Aiming to rein in the rising cost of prescription drugs, the law targets for price negotiation certain medications that have resulted in high expenditures for Medicare, the U.S. government health insurance program for people 65 or older.
The plan could impact costs for patients as drug coverage affects out-of-pocket payments and premiums for Medicare beneficiaries. Americans pay more for pharmaceuticals than people in any other nation.
Mechanics of the Medicare Drug Price Negotiation Plan
The law requires a drugmaker to negotiate a maximum price for specific medicines directly with the Centers for Medicare & Medicaid Services (CMS), the federal agency that runs Medicare, or withdraw all of its drugs from those programs. Failure to reach an agreement on price can result in steep daily excise taxes.
Despite multiple lawsuits, the first negotiated prices on 10 drugs went into effect this year.
Political and Legal Responses to the Drug Pricing Plan
Republican President Donald Trump's administration is defending against the industry's challenges and cited the plan as part of its efforts to reduce prescription drug costs.
"Under President Trump's leadership, CMS is taking strong action to target the most expensive drugs in Medicare," CMS Administrator Mehmet Oz said in January, touting the latest drugs selected for negotiation.
Drugmakers' Legal Arguments Against the Plan
The six companies whose appeals are before the Supreme Court sued after CMS targeted their medications for price curbs. They made various legal claims, many grounded in their contention that the drug pricing plan is not a negotiation at all, but rather a scheme to impose upon them government-dictated price controls.
The drugmakers variously argued that the plan violates the U.S. Constitution's Fifth Amendment by undermining their due process rights or taking their property without compensation, and the First Amendment guarantee of free speech by forcing them to convey the government's views on what constitutes fair drug prices.
Novo Nordisk, a Danish pharmaceutical company whose insulin products were targeted by Medicare, also argued that the law improperly delegates legislative authority to an executive branch agency, violating the Constitution's separation of powers among the different branches of government.
Lower Court Decisions
The Philadelphia-based 3rd U.S. Circuit Court of Appeals sided with the U.S. government in five of the companies' lawsuits, while the Manhattan-based 2nd U.S. Circuit Court of Appeals also sided with the government in the case of German drugmaker Boehringer Ingelheim.
(Reporting by Andrew Chung in New York; Editing by Will Dunham)
