AstraZeneca joins Johnson & Johnson and Bristol Myers Squibb in appealing a previous legal loss for its challenge to the government’s drug price-setting program.
AstraZeneca on Monday appealed a prior legal loss in its ongoing campaign to block the government’s drug price negotiation program under the Inflation Reduction Act.
In its filing to the U.S. Court of Appeals for the Third Circuit, AstraZeneca reiterated its claim that the price-setting program violates its constitutional rights. The pharma argues that the negotiation program runs contrary to the due process clause under the Fifth Amendment.
Under the Inflation Reduction Act (IRA), the Centers for Medicare and Medicaid Services (CMS) will be allowed to renegotiate the selling price of AstraZeneca’s diabetes drug Farxiga (dapagliflozin), with the new pricing to take effect in 2026. According to the pharma’s lawsuit, the process of the negotiations does not give the company the opportunity to be heard “at a meaningful time and in a meaningful manner.”
“On the front end, manufacturers do not sign up for participation in the Program; they are selected for negotiation by the government,” AstraZeneca claims. “On the back end, the Program bars administrative or judicial review of many of CMS’s key decisions. The program also denies AstraZeneca an impartial adjudicator.”
Under the rules of the drug price negotiation program, CMS—which AstraZeneca says has a “vested interest” in the matter—has the power to ultimately decide whether a drug qualifies for negotiations and what the new price will be.
Crucial to this claim is the contention that the IRA program is essentially involuntary. AstraZeneca lost this argument in March 2024, when a Delaware court ruled in favor of the government. District Judge Colm Connolly wrote at the time that AstraZeneca’s due process challenge fell flat because the company is not entitled to sell its products at any price other than what the state is willing to pay.
In an email to BioSpace after the ruling, John Bennett, partner at the law firm Allen & Overy, said that “the critical finding is that there is no constitutional property interest at play because electing to market a pharmaceutical product to Medicare is entirely voluntary.”
In its appeal, AstraZeneca insisted that Connolly’s “’voluntariness’ exception” is “both wrong and dangerous.” The pharma argues that the program “functionally mandates compliance” because of its fines and “unrealistic opt-out requirements.” Plus, according to the company, “the mere fact that participation in a government program is voluntary does not mean the government can dispense with due process.”
With its appeal on Monday, AstraZeneca joins fellow big pharma players Johnson & Johnson and Bristol Myers Squibb, which have also appealed similar losses. In April 2024, a New Jersey court ruled against the latter two companies, finding that the drug price negotiation does not run afoul of the Constitution.
“In short, Defendants are not taking drugs from Plaintiffs,” New Jersey Judge Zahid Quraishi wrote at the time, noting that while selling their drugs to Medicare “may be less profitable than it was before the institution of the Program . . . that does not make Defendants’ decision to participate any less voluntary.”
