Monday, July 15, 2024

Price Negotiation Challenge Rejected Again by Judge in Medicare Case

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Price negotiation program for Medicare has been upheld by a Connecticut federal judge who ruled in favor of the US Department of Health and Human Services (HHS) in the lawsuit filed by Boehringer Ingelheim. This decision marks another significant victory for the HHS in its ongoing legal battles with the pharmaceutical industry over this key policy component of President Biden’s Inflation Reduction Act (IRA).

Judge Michael Shea denied all of Boehringer’s claims, which argued that the Medicare negotiation program is unconstitutional. In his ruling, Judge Shea emphasized that participation in Medicare is voluntary for pharmaceutical companies, though it comes with substantial economic incentives. He affirmed that the federal government has the right to impose conditions on companies that benefit from its programs.

Price Negotiation Setbacks: Pharmaceutical Industry Faces Continued Court Defeats

This ruling continues a series of setbacks for the pharmaceutical industry, which has seen similar challenges dismissed in court. Prior to Boehringer’s case, companies such as Bristol-Myers Squibb, Johnson & Johnson, AstraZeneca, and organizations like the Pharmaceutical Research and Manufacturers of America (PhRMA) and the US Chamber of Commerce have all faced defeats in their efforts to contest the Medicare price negotiation program.

Boehringer Ingelheim’s lawsuit echoed the arguments made in other cases, claiming that Medicare’s price negotiation infringes on the due process and takings clauses of the Fifth Amendment. The company contended that forcing them to agree to government-set drug prices amounted to an illegal ‘physical taking’ of property. Additionally, Boehringer argued that the program violated the First Amendment by compelling them to sign agreements that acknowledged the negotiated prices as fair, and the Eighth Amendment by imposing what they termed an excise tax designed to coerce acceptance of the government-mandated prices.

A central argument from Boehringer and other pharma companies is that the program is not a genuine negotiation but rather a mandatory price-setting mechanism enforced by punitive fines for non-compliance. Under the IRA, companies that refuse to negotiate drug prices with Medicare face an excise tax starting at 65% of the US sales of the product, escalating by 10% each quarter, up to a maximum of 95%.


Price Negotiations: Boehringer Ingelheim Challenges Inclusion of Jardiance, Yet Commits to Initial Round

Boehringer Ingelheim filed its challenge in August, shortly after it became evident that its top-selling diabetes medication, Jardiance (empagliflozin), co-marketed with Eli Lilly, was included among the first 10 drugs selected for the initial round of Medicare pricing negotiations. Despite the legal challenge, Boehringer publicly committed to participating in the first round of Medicare price negotiations a few weeks later.

Assuming the pharmaceutical industry’s legal challenges continue to be unsuccessful, the negotiated prices are set to be announced on September 1, 2024, and will take effect on January 1, 2026. This timeline underscores the ongoing efforts by the government to implement measures aimed at reducing drug costs for Medicare beneficiaries, despite strong opposition from the pharmaceutical industry.

The broader implications of this ruling are significant, as it reinforces the government’s authority to regulate drug prices within the Medicare program. This decision may deter future legal challenges from other pharmaceutical companies, potentially leading to more widespread acceptance and compliance with the program.

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In summary, the ruling by Judge Michael Shea represents a major step in the implementation of the Medicare drug price negotiation program, a critical component of the Inflation Reduction Act. By rejecting Boehringer Ingelheim’s claims, the court has upheld the government’s ability to impose conditions on pharmaceutical companies that participate in Medicare, including negotiating drug prices to ensure affordability for beneficiaries.

This outcome not only affects Boehringer but also sets a precedent that may influence future legal and regulatory actions in the pharmaceutical industry. As the program moves forward, the impact of these negotiations on drug pricing and healthcare costs will be closely monitored by all stakeholders involved.


Resource: Pharmaphorum, July 04, 2024

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