Federal court rejects PhRMA challenge to Medicare drug price negotiation

A federal appeals court on Wednesday ruled against a lawsuit filed by representatives of the pharmaceutical industry challenging the federal Medicare drug price negotiation program, finding that drugmakers are not entitled to sell their products to Medicare at a price they would prefer.

The U.S. Court of Appeals for the 5th Circuit affirmed a prior ruling granting summary judgment against the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing the pharmaceutical industry.

The ruling this week is the latest in what has been a slew of federal courts ruling in favor of the Medicare drug price negotiation program established through the Inflation Reduction Act.

Much of the court’s decision, as has been with other courts, boiled down to the fact that drugmaker participation in Medicare is entirely voluntary and manufacturers are not required to sell their products through the program if they disagree with drug price negotiation.

“We conclude that manufacturers lack a protected interest in selling to Medicare beneficiaries at a preferred price because participation in Medicare and Medicaid, and thus in the Program, is voluntary,” the ruling stated.

The court acknowledged the “financial importance” of drugmakers being able to sell medications to Medicare, but also found that financial pressures are not the same as forcing involuntary participation.

U.S. District Judge David Alan Ezra had dismissed the lawsuit from PhRMA last year, finding that the plaintiffs “cannot demonstrate that the Program deprives them of a protected interest and therefore their Due Process Clause claim fails as a matter of law.”

Other legal challenges brought forth by organizations like the U.S. Chamber of Commerce and drugmakers like Boehringer Ingelheim, AstraZeneca and Merck have also failed to win in court. In May, the Supreme Court declined to take up a petition by drugmakers challenging Medicare negotiation, essentially affirming the lower courts that have rejected their arguments.

Patient advocacy groups celebrated the ruling.

“PhRMA has been at the center of the industry’s years-long, multi-million-dollar legal campaign to overturn Medicare negotiation. Now, they’ve lost one of their most significant challenges to the program to date. The Fifth Circuit rejected this sweeping constitutional attack, delivering the 25th courtroom victory for Medicare negotiation and the patients who fought for it,” Emma Sands, director of media and communications at Patients For Affordable Drugs, said in a statement.

Peter Maybarduk, access to medicines director for the consumer rights nonprofit Public Citizen, said in a statement, “For years, drugmakers sought to sow doubt and find a sympathetic court, fighting something everyone wants, which is affordable medicine and a government that negotiates aggressively on Americans’ behalf. They failed.”

The Hill has reached out to PhRMA for comment.