Tuesday, July 16, 2024

Medicare Price Negotiation Challenge Dismissed by Judge

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Medicare’s drug price negotiation program has been upheld by a Connecticut federal judge, who ruled in favor of the US Department of Health and Human Services (HHS) and rejected Boehringer Ingelheim’s challenge. Judge Michael Shea dismissed all of Boehringer’s claims that the Medicare negotiation program, a key policy in President Biden’s Inflation Reduction Act, is unconstitutional.

Medicare’s drug price negotiation program has been upheld by a Connecticut federal judge, who ruled in favor of the US Department of Health and Human Services (HHS) and rejected Boehringer Ingelheim’s challenge. Boehringer contended that the program violated the due process and takings clauses of the Fifth Amendment, arguing that allowing Medicare to negotiate the prices of their drugs amounted to an illegal ‘physical taking’ of their property.

Medicare Price Negotiation Program Faces First and Eighth Amendment Challenges from Boehringer

The company also claimed that the program infringed upon their First Amendment right to free speech by compelling them to sign agreements stating that the negotiated prices are fair. Furthermore, Boehringer argued that the negotiations violated the Eighth Amendment, asserting that the process amounts to an excise tax designed to coerce pharmaceutical manufacturers into accepting government-mandated drug prices.

Judge Shea stated that Boehringer’s participation in Medicare is voluntary, although it comes with “considerable economic incentive.” He added that the federal government is entitled to impose conditions on companies benefiting from its programs. This decision continues a trend of setbacks for the pharmaceutical industry, which has seen similar defeats in court for companies like Bristol-Myers Squibb, Johnson & Johnson, AstraZeneca, and trade organizations like the Pharmaceutical Research and Manufacturers of America (PhRMA) and the US Chamber of Commerce.

medicare

Medicare Price Negotiation Program Challenged by Boehringer on Fifth, First, and Eighth Amendment Grounds

Boehringer’s lawsuit argued that allowing Medicare to negotiate drug prices amounted to an illegal ‘physical taking’ of their property under the Fifth Amendment. They also claimed it violated their First Amendment rights by requiring them to sign agreements stating the prices set by the government were fair. Furthermore, they argued that the negotiations violated the Eighth Amendment, suggesting that they constituted an excise tax designed to force manufacturers to accept government-mandated prices. The assertion is that the government is not truly negotiating but is instead mandating prices, with punitive fines backing compliance.

Under the Inflation Reduction Act, companies that refuse to lower prices risk an excise tax starting at 65% of US sales of a product, increasing by 10% every quarter until it reaches a maximum of 95%. Boehringer filed its challenge last August when it became evident that its popular diabetes treatment Jardiance (empagliflozin), sold in partnership with Eli Lilly, was included among the first 10 medicines subject to Medicare pricing negotiations. Despite filing the lawsuit, Boehringer publicly committed to entering the first round of Medicare price talks.

The new negotiated prices are scheduled to be announced on 1st September 2024 and will take effect on 1st January 2026, assuming the pharmaceutical industry’s legal challenges remain unsuccessful. The continuous legal defeats indicate a challenging road ahead for the pharma industry in opposing the Medicare drug price negotiation program, which aims to lower drug costs for millions of Americans. The decisions from various courts reinforce the government’s stance on negotiating drug prices, emphasizing the voluntary nature of participation in Medicare and the legitimacy of imposing conditions on benefiting companies.

The ongoing legal battles highlight the tension between the government’s efforts to control drug prices and the pharmaceutical industry’s desire to maintain pricing autonomy. These rulings could set significant precedents for how drug pricing negotiations are handled in the future, potentially reshaping the landscape of pharmaceutical sales and pricing in the US. As the industry continues to challenge these regulations, the outcomes of such cases will be closely watched by stakeholders on all sides.

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Resource: Pharmaphorum, July 04, 2024

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