For the second time in less than a month, a federal court has rejected a pharmaceutical industry lawsuit challenging the drug pricing powers Medicare was granted by the Inflation Reduction Act.
The U.S. District Court for the District of Delaware on Friday rebuffed AstraZeneca’s claims that the authority Medicare received under the IRA is unconstitutional. That decision was issued three weeks after the same court dismissed a suit from The Pharmaceutical Research and Manufacturers of America under the grounds it was filed in the wrong venue.
AstraZeneca sued in August, days before its diabetes pill Farxiga was announced as one of the first 10 products that will be subjected to price negotiations with the U.S. government. The company, like other drugmakers to challenge the law, argued that the IRA’s drug pricing provisions violate due process protections by setting a “maximum fair price” for a medicine.
AstraZeneca specifically alleged that Medicare unlawfully defined a “single source” drug as applying to all doses and formulations of a specific active drug ingredient. That, in turn, enabled CMS to incorrectly apply such terminology to all formulations and dosages of Farxiga, without taking into account the possibility the drug could face generic competition in 2026, AstraZeneca argued.
Chief Judge Colm Connolly rejected both arguments. In a 47-page decision, Connolly stated that participation in Medicare is voluntary and AstraZeneca is not “entitled to sell the government drugs at prices the government won't agree to pay.” He also any potential harm to AstraZeneca for simultaneously facing price negotiations as well as generic competition as “speculative.”
AstraZeneca and PhRMA weren’t alone in challenging the IRA. Merck & Co., Bristol Myers Squibb, Novartis, Novo Nordisk, Johnson & Johnson and Boehringer Ingelheim have all filed lawsuits. Astellas Pharma did as well, but withdrew its challenge when its cancer drug Xtandi wasn’t included on CMS’ list.
Arguments from Bristol Myers, Johnson & Johnson, Novartis and Novo Nordisk will be heard in a joint hearing later this week at a federal court in New Jersey.