A federal appeals court has dealt another blow to the pharmaceutical industry's effort to stop Medicare's drug price negotiation program, ruling in favor of the federal government and upholding key provisions of the Inflation Reduction Act (IRA). The decision from the U.S. Court of Appeals for the Fifth Circuit on Wednesday rejected a lawsuit brought by the Pharmaceutical Research and Manufacturers of America (PhRMA) and other groups challenging the constitutionality of Medicare drug price negotiations.
The ruling is the latest in a series of courtroom defeats for drugmakers seeking to halt the program, which allows Medicare to negotiate the prices of certain high-cost prescription medications used by seniors. Prescription drug costs remain one of the biggest financial concerns for older Americans. The Medicare Drug Price Negotiation Program was created under the Inflation Reduction Act signed into law in 2022 and is intended to reduce costs for beneficiaries and taxpayers by allowing the government to negotiate prices directly with drug manufacturers.
The pharmaceutical industry has argued that the program unfairly pressures companies into accepting government-set prices and could discourage future innovation. But many lawmakers and beneficiaries believe the policy is necessary to address decades of rising prescription drug costs. On Wednesday, the Fifth Circuit affirmed a lower-court decision that rejected arguments from PhRMA, the National Infusion Center Association and the Global Colon Cancer Association.
The plaintiffs argued that the Medicare negotiation program violated constitutional protections, including due process guarantees and limits on government power. However, Judge Leslie Southwick, writing for the court, said that drug manufacturers do not have a protected right to sell medicines to Medicare beneficiaries at prices of their choosing because participation in Medicare and Medicaid is voluntary. The ruling follows similar setbacks for other industry company challengers like Merck and AstraZeneca, as well as lawsuits supported by the U.S.
Supreme Court declined earlier this year to take up several challenges to the program. The Fifth Circuit found that drugmakers lack a protected property interest in selling medications to Medicare beneficiaries at preferred prices because participation in the program is voluntary. In its opinion, the court wrote that the financial importance of Medicare sales does not amount to legal compulsion, even if companies have strong economic incentives to participate.
The program is designed to lower the cost of certain high-spending prescription drugs covered by Medicare, potentially reducing out-of-pocket expenses for many seniors. Or quietly stretches it, delays a refill, or skips it because of the price,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. The PhRMA lawsuit primarily challenged the structure and legality of the Medicare negotiation program itself rather than focusing on a single medicine.
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