Jonathan Raa | Nurphoto | Getty Images
On Monday, a federal judge in Modern Jersey rejected that proposal Johnson and Johnsonand Bristol Myers Squibbchallenges the Biden administration’s legal negotiations on Medicare drug prices, declaring the program constitutional.
The decision marks another victory for the White House in a fierce legal battle with several drugmakers over pricing talks. The ruling also weakens the drug industry’s strategy of seeking split rulings in lower courts scattered across the United States, which could escalate the case to the Supreme Court.
Medicare drug price negotiations are a key policy under President Joe Biden’s Curb Inflation Act, which aims to make costly drugs more affordable for seniors. In this way, he could cut into the profits of drug manufacturers. Final negotiated prices for the first round of drugs under discussion, including one each from J&J and Bristol Myers, will take effect in 2026.
A J&J spokesperson plans to appeal the decision, the spokesman said in a statement to CNBC.
“This is a disappointing ruling for patients and America’s leadership in medical innovation,” they added.
Bristol Myers Squibb did not immediately respond to requests for comment on the ruling.
In separate lawsuits, drugmakers argued that the negotiations amounted to an unconstitutional government confiscation of their drugs and a violation of their right to free speech. They also argued that the interviews constituted an unconstitutional condition for participation in the Medicaid and Medicare programs.
But Judge Zahid Quraishi of the District of Modern Jersey wrote in a 26-page opinion that participation in the Medicare and Medicaid price talks and marketplaces is voluntary.
The negotiations do not require drugmakers to “set aside, hold back, or otherwise reserve any of their drugs” for utilize by the government or Medicare beneficiaries, he wrote. Quraishi added that the talks do not force producers to physically ship or transport drugs at the recent negotiated price.
“Sales to Medicare may be less profitable than before the introduction of the Program, but that does not mean it is [J&J and Bristol Myers Squibb’s] the decision to participate in any way less voluntary,” Quraishi wrote. “For the reasons stated, the Court finds that the Scheme does not result in the physical receipt or direct misappropriation” of drugs from the two drug manufacturers.
J&J, Bristol Myers Squibb, Novo Nordisk and Novartis presented oral submissions to Quraishi at the same hearing in March.
That same month, a federal judge in Delaware dismissed a separate AstraZeneca lawsuit challenging the negotiations. In February, a third federal judge in Texas filed a separate lawsuit.
A federal judge in Ohio also issued a ruling in September that rejected a preliminary injunction issued by the Chamber of Commerce, one of the nation’s largest lobbying groups, that sought to block price talks before Oct. 1.
