Federal Judge Allows Medicare Drug Price Negotiations to Proceed
A federal judge has rejected the Chamber of Commerce’s request to block the implementation of Medicare drug price negotiations, a process aimed at making expensive medications more affordable for older Americans. The judge denied a preliminary injunction that sought to halt the price talks before October 1, which is the deadline for manufacturers of the first 10 drugs selected for negotiations to agree to participate.
The judge, who was nominated by former President Donald Trump, also declined to dismiss the case entirely but asked the Chamber to clarify certain details in their complaint by October 13. The Biden administration was given until October 27 to renew its motion to dismiss the case.
This ruling is seen as a setback for the pharmaceutical industry, which considers the negotiation process a threat to its revenue growth, profits, and drug innovation.
Chamber of Commerce Lawsuit Challenges Medicare Drug Price Negotiations
The Chamber of Commerce filed a lawsuit arguing that the Medicare drug price negotiation program violates drugmakers’ due process rights under the Fifth Amendment. They claim that the government’s power to dictate prices for medicines infringes on these rights and that the negotiations do not provide adequate procedural safeguards.
The Chamber points to a 2001 court case, Michigan Bell Telephone Co. v. Engler, which established the requirement for procedural safeguards when the government sets prices. They argue that the Medicare negotiations impose price caps that are significantly below a drug’s market value, potentially resulting in unfair prices.
The Chamber’s attorney warned that drugmakers must either accept the government-set price or face an excise tax of up to 1,900% of U.S. sales of the drug. However, lawyers for the Department of Justice argued that participation in the program is voluntary, and drugmakers can choose to withdraw from Medicare and Medicaid programs instead.
Implications and Future of Medicare Drug Price Negotiations
The ruling from Judge Michael Newman is a setback for the pharmaceutical industry’s efforts to challenge the constitutionality of the Medicare drug price negotiation process. The industry hopes to obtain conflicting rulings from federal appellate courts, potentially leading to a Supreme Court review.
The Medicare program covers approximately 66 million people in the U.S., and the drug price negotiations are expected to save the insurance program an estimated $98.5 billion over a decade. The negotiations officially began in August, with the first round focusing on 10 drugs. The reduced prices for these medications will not take effect until January 2026.
Overall, the ruling allows the Biden administration to proceed with its goal of making prescription drugs more affordable for older Americans, while the pharmaceutical industry continues its legal battle to challenge the negotiation process.
