A federal appeals court ruled Wednesday that the federal Medicare drug price negotiation program can continue, rejecting a legal challenge from the pharmaceutical industry. The U.S. Court of Appeals for the Fifth Circuit found that drug manufacturers do not have a constitutional right to sell their products to the government at prices they prefer. The decision affirmed a previous lower court ruling that granted summary judgment against the Pharmaceutical Research and Manufacturers of America (PhRMA).
The legal dispute centered on the Inflation Reduction Act, which established a program allowing Medicare to negotiate prices for certain prescription drugs. PhRMA, a trade group representing pharmaceutical companies, argued that the program violated the Due Process Clause. However, the Fifth Circuit concluded that because participation in Medicare and Medicaid is voluntary, manufacturers lack a protected interest in selling to beneficiaries at a specific price.
U.S. District Judge David Alan Ezra had previously dismissed the lawsuit, a decision the appeals court upheld. The ruling noted that while selling to Medicare is financially important to drugmakers, the financial pressure to participate does not constitute involuntary participation. This decision follows similar rulings in other federal courts and a May decision by the U.S. Supreme Court to decline a petition by drugmakers challenging the program.
The scale of the legal effort is significant, with this ruling marking what advocacy groups described as the 25th courtroom victory for the negotiation program. Large drugmakers including Merck, AstraZeneca, and Boehringer Ingelheim, along with the U.S. Chamber of Commerce, have all filed similar unsuccessful challenges. The pharmaceutical industry has invested millions of dollars into this multi-year legal campaign to overturn the program, according to Patients For Affordable Drugs.
For Medicare enrollees, the immediate impact is the continuation of a program meant to change how much they pay for specific medications, though the source does not list a specific effective date for new prices. The ruling sets a precedent that the voluntary nature of government programs like Medicare and Medicaid limits the due process claims private companies can make regarding price settings. Moving forward, the program remains intact as the industry has failed to win similar challenges at multiple levels of judicial review, including at the Supreme Court.