With Friday’s ruling by New Jersey District Judge Zahid Quraishi, Novartis joins a growing list of pharmaceutical companies that have failed in their legal challenges to the Inflation Reduction Act.
A New Jersey court on Friday threw out Novartis’ case against the Medicare Drug Price Negotiation Program, handing the Biden administration its latest victory in the legal battle over the Inflation Reduction Act.
District Judge Zahid Quraishi wrote in his opinion that Novartis made “nearly identical constitutional challenges” to the negotiation program as other pharma companies, including Bristol Myers Squibb and Johnson & Johnson’s subsidiary Janssen Pharmaceuticals.
The companies allege that the drug negotiation program, mandated by the Inflation Reduction Act (IRA), violates both the First and Fifth Amendments of the U.S. Constitution because it forces them to sell their personal property on the government’s terms, while compelling them to “promote the government’s preferred narrative that it is engaged in a negotiation.”
However, Quraishi in his ruling on Friday reiterated that the court previously “found that participation in the program is voluntary,” and that it does not constitute a “physical taking of a manufacturer’s drugs.” The judge also ruled that the program does not force the companies’ speech in any way since any “speech” aspects of the program are “merely incidental mechanisms” of the negotiation.
BMS and Janssen, which made similar arguments against the drug price negotiation program, lost their lawsuits in April 2024. Quraishi also handled their cases.
In addition to invoking the First and Fifth Amendments, Novartis also alleged that the IRA violates its Eighth Amendment rights because it imposes excessive fines. On this matter, Quraishi concluded that his court “lacks jurisdiction to resolve this claim” under the Anti-Injunction Act, which has a statute that prevents federal courts from prohibiting the Internal Revenue Service from assessing or collecting taxes.
With Friday’s ruling, Novartis joins the growing list of pharma companies that have failed to challenge the government’s drug price negotiation under the IRA.
In March 2024, Delaware District Judge Colm Connolly denied AstraZeneca’s motion for an injunction against the program, noting that the pharma has “no legitimate claim of entitlement to sell its drugs to the Government at any price other than what the Government is willing to pay.”
In July 2024, the District Court of Connecticut ruled against Boehringer Ingelheim, maintaining that the program is voluntary and that companies are free to back out of it should they choose. Judge Michael Shea also recognized that the government “is free to use its economic power as a bulk purchaser of certain goods to negotiation better deals.”
Novo Nordisk in August 2024 also lost its IRA case, with Quraishi reiterating his judgement in the BMS and Janssen cases. The drug price negotiation program “is neither a physical taking nor a per se taking of a manufacturer’s drugs,” he wrote at the time.
However, the one ray of light for the industry’s legal challenge to the IRA rests on a lawsuit filed by the Pharmaceutical Research and Manufacturers of America. The Fifth Circuit Court of Appeals last month took the side of PhRMA, ruling that the district court has jurisdiction over the case and sending the trade group’s legal complaint back to a lower Texas court.
