The Big Pharma companies made a last-ditch effort asking a U.S. appeals court to reconsider their lawsuits against the Inflation Reduction Act’s Medicare drug price negotiations, which they contend infringe on their constitutional rights.
AstraZeneca, Bristol Myers Squibb and Johnson & Johnson last week appeared before a U.S. Court of Appeals for the Third Circuit panel of judges in a bid to revive their legal challenge to the Inflation Reduction Act’s Drug Price Negotiation Program, according to media reports.
Lawyers for the companies took aim at the constitutionality of the Medicare program, insisting that the drug negotiations violate several of the companies’ core constitutional rights. According to the court minutes, each pharma was given 20 minutes to lay out its arguments before the panel, focusing on one constitutional issue. The U.S. government’s lawyers were also allotted 20 minutes to provide the counterpoints to the legal claims.
Jones Day lawyer Yaakov Roth in an argument for BMS claimed that the drug price negotiations do not give the pharma companies an opportunity to negotiate. Instead, the program is akin to a “gun to the head” since non-participation is met with either steep fines or losing access to the Medicare market, according to Reuters.
Roth argued that the Inflation Reduction Act (IRA) Drug Price Negotiation Program violates the companies’ Fifth Amendment right to due process and against the unlawful seizure of property by the government without proper compensation.
Covington & Burling’s Kevin King, representing J&J subsidiary Janssen Pharmaceuticals, focused on the First Amendment and arguing that the term “maximum fair price”—which the negotiation program uses to refer to the final agreed-upon drug prices—is misleading. The label implies that the companies have agreed the new pricing is fair, even if that isn’t the case.
Government lawyer Catherine Padhi countered the industry’s arguments, insisting that the negotiations are voluntary and that the government is free to leverage its purchasing power to secure the best deals it can for Medicare beneficiaries.
Padhi maintained that “maximum fair price” is a “statutory term of art”—wording that carries specific legal meaning and “does not reflect a subjective value judgment.” Besides, as King conceded after being questioned by Judge Arianna Freeman, companies are not precluded from putting out their own statements to announce that the IRA prices are not fair, according to Endpoints News.
It is yet clear where the appeals judges lean and whether the legal complaints will be taken forward. While the panel sometimes pushed back on the government’s line of argument, pointing out that it may be taking advantage of the huge Medicare market to essentially force companies to comply, the judges noted that industry simply wants the unencumbered benefits of the government’s business and free market pricing.
Wednesday’s appeals hearing is the latest development in the industry’s unsuccessful attempt to block the IRA. Last month, a New Jersey district court threw out Novartis’ legal challenge, which made similar constitutional arguments as those by BMS, J&J and AstraZeneca. In August 2024, an Ohio judge similarly dismissed the U.S. Chamber of Commerce’s lawsuit, arguing that the association does not have standing to bring the case against the government.
However, in September, the Pharmaceutical Research and Manufacturers of America (PhRMA) scored a rare win as the Fifth Circuit Court of Appeals ruled in the trade group’s favor, sending its complaint against the IRA back to a lower Texas court.
