Multiple drugmakers say they are sticking with their legal strategies against the Inflation Reduction Act even though they agreed to negotiated prices for their therapies.
The Centers for Medicare & Medicaid Services announced the negotiated prices for the first 10 drugs included in the program on Thursday and commented for the first time on the negotiation process, calling it “genuine” and “thoughtful.” The agency said it raised offers for each drug following discussions with drugmakers and it accepted revised counter-offers for four drugs.
Since then, multiple drugmakers have reaffirmed their constitutional challenges to the law as cases proceed in federal district and appellate courts.
“We continue to believe the IRA’s so-called ‘negotiation’ program violates the Constitution in several fundamental respects,” a Merck spokesperson told Endpoints News on Friday.
Merck has yet to receive a decision on its case, despite being the first drugmaker to file suit. The company asked a DC federal court for a decision “as soon as practicable” last month. AstraZeneca, Bristol Myers Squibb, Johnson & Johnson and Novo Nordisk have all appealed to the Third Circuit after receiving rejections from district judges, and Boehringer Ingelheim has appealed to the Second Circuit.
AstraZeneca asked the Third Circuit in May to hear its case alongside Bristol Myers and J&J on the same day, with AstraZeneca saying doing so would align hearings on overlapping issues and put all three cases on the same timeline for a decision “ideally by early 2025,” according to court documents. The company said Friday that it can’t comment on ongoing litigation.
Novo Nordisk also confirmed to Endpoints on Friday that its legal approach “is not changing,” and Novartis said in a statement on Thursday that it continues to believe “the price-setting provisions in the IRA are unconstitutional.”
When asked about court cases against the IRA, HHS chief competition officer Stacy Sanders said in an interview on Thursday that “we believe that the law is on our side, and we will continue to vigorously defend the law.”
Will parties use negotiated prices in court?
Zachary Baron, director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute, told Endpoints that both sides may try to use CMS’ price announcement in their favor.
Zachary Baron“You could see, on one hand, the Department of Justice saying, ‘Well, look, this was a real negotiation. Nobody pulled out. They had all sorts of options to do so,’” he said. “On the other hand, I suppose industry could argue, ‘Well, look, this is really just proving our point that this was a gun to the head all along and we couldn’t get out of the negotiation.’”
Senior administration officials said the CMS plans to publish more details on the negotiations by March, including information about the exchange of offers.
“We’ll see which party first seeks to raise the final negotiated prices to the court,” Baron said.
Michelle Mello, a professor of law and health policy at Stanford University, said the price announcements aren’t likely to change the fact that “drug companies’ legal challenges haven’t been going well for them.”
“By clarifying the amount of money at stake in negotiations, the announcement might strengthen arguments that companies can assert a legal injury right now, but it’s hard to argue these are unlawfully dramatic price cuts compared to the prices at which companies were already selling to Medicare after rebates,” Mello said.