A federal judge ruled last week that the U.S. government can use its economic standing as a bulk purchaser to negotiate for better deals, handing Boehringer Ingelheim a loss in its legal challenge to the Inflation Reduction Act.
A federal court last week ruled against Boehringer Ingelheim’s legal challenge to the Medicare Drug Price Negotiation Program, granting the Biden administration its latest victory against the pharma industry’s push to block the Inflation Reduction Act.
In its lawsuit filed in August 2023, the pharma argued that the negotiation program is voluntary only in name. By leveraging Medicare and Medicaid—which account for around half of the market—the government is essentially forcing the companies to participate in the drug price negotiations.
In a 47-page decision, Judge Michael Shea of the U.S. District Court of Connecticut disagreed with the pharma ruling that companies remain free to withdraw from Medicare or Medicaid and can decide not to participate in the drug price negotiations.
Boehringer Ingelheim’s participation in Medicare and Medicaid remains “voluntary,” Shea wrote, “even if [the company] has a considerable economic incentive to participate.” Similarly, the law does not disallow the government from imposing certain limitations on the participation of private entities in its programs.
“The federal government is free to use its economic power as a bulk purchaser of certain goods to negotiate better deals for those goods,” the judge wrote.
Shea was also not swayed by Boehringer Ingelheim’s First Amendment claims, noting that because the company is free to drop out of the program the government is not compelling it to echo certain narratives related to the drug negotiations.
“Given the text of the Manufacturer Agreement, including the disclaimers added by [the Centers for Medicare and Medicaid Services], BI cannot show it has been forced to ‘convey a particularized message,’ or that the ‘likelihood was great’ that anyone who read the Agreement would understand BI to be espousing the views with which it ’strongly disagrees,’” Shea wrote.
Last week’s ruling continues the pharma industry’s losing streak in its legal challenge to the Biden administration’s Inflation Reduction Act (IRA).
In March 2024, four pharma companies—Bristol Myers Squibb, Novartis, Novo Nordisk and Johnson & Johnson—argued before a New Jersey court, laying out their respective cases for why the Medicare Drug Price Negotiation Program violates their constitutional rights. Judge Zahid Quraishi was skeptical of the claims and was unconvinced that the program was not voluntary.
A month later, Quraishi ruled against J&J and BMS finding that the drug price negotiation does not violate the companies’ constitutional rights.
AstraZeneca also suffered a legal loss in its IRA challenge, with a Delaware judge ruling in March 2024 that the pharma had “no legitimate claim of entitlement to sell its drugs to the Government at any price other than what the Government is willing to pay.”
