Reiterating his ruling in a prior Inflation Reduction Act case, New Jersey District Court Judge Zahid Quraishi ruled that Novo Nordisk’s participation in the Medicare Drug Price Negotiation Program is of its own free will.
A federal judge on Wednesday handed Novo Nordisk a legal loss in its challenge to the Inflation Reduction Act, ruling that its participation in the Medicare Drug Price Negotiation Program is voluntary.
New Jersey District Court Judge Zahid Quraishi referenced his previous ruling on Bristol Myers Squibb and Johnson & Johnson’s challenge to the negotiation program. The two companies in April 2024 lost their respective suits, with Quraishi rejecting their claims that the government is unlawfully setting prices for their products.
“The Court addressed nearly identical constitutional challenges that the Plaintiffs make here,” the judge wrote, reiterating that the Inflation Reduction Act (IRA) program “is neither a physical taking nor a per se taking of a manufacturer’s drugs.” The drug price negotiations also remain voluntary, Quraishi contended, and that pharma companies have “alternative options” if they decide to not participate in the program.
Quraishi also rejected Novo’s arguments invoking its right to freedom of speech under the First Amendment. “The IRA regulates conduct, not speech,” the judge wrote, pointing out that any effects that the program might have on speech “are merely incidental mechanisms used during the price-setting process.”
Novo first sued the Biden administration over its IRA program in September 2023, alleging that the drug price negotiations violate the Constitution “because it eliminates essential procedural and substantive safeguards” to “protect the important public and private interests at stake when price controls are imposed on a major sector of the economy.”
The Centers for Medicare and Medicaid Services (CMS) also “sought to impose new substantive obligations that far exceed the lawful bounds” of its authority, according to Novo.
In December 2023, Novo filed a motion for summary judgement in the case. A month later, the government registered its opposition to Novo’s motion and filed its own cross-motion for summary judgement in its favor. Quraishi on Wednesday granted its cross-motion and denied Novo’s original summary judgement motion.
The pharma industry has so far been unsuccessful in its legal challenge to the IRA. In October 2023, Judge Michael Newman of the Southern District of Ohio blocked the U.S. Chamber of Commerce’s request for a preliminary injunction against the Medicare Drug Price Negotiation Program.
In March 2024, AstraZeneca also lost its lawsuit with a Delaware federal judge finding 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.”
The price negotiations with participating companies for the initial 10 drugs in the program wrapped up this week, and CMS is due to publish the maximum fair prices in September. The new prices will take effect in 2026.
