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A federal judge in New Jersey refused on Monday Johnson & Johnson's and Bristol Myers Squibbhas challenged the Biden administration's legal challenges to Medicare drug pricing negotiations, finding the program to be constitutional.
The decision is another victory for the White House in a bitter legal battle with several drugmakers over price negotiations. The ruling also weakens the drug industry's strategy of seeking separate rulings in lower courts scattered across the U.S., which could result in the matter moving to the Supreme Court.
Medicare drug price negotiations are a key measure under President Joe Biden's Inflation Reduction Act, which aims to make expensive drugs more affordable for seniors. This could reduce drug manufacturers' profits. Final negotiated prices for the first round of negotiated drugs, which include one each from J&J and Bristol Myers, will take effect in 2026.
J&J plans to appeal the decision, a spokesperson 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, the drugmakers argued that the negotiations constituted an unconstitutional government seizure of their drugs and a violation of their right to free speech. They also argued that the interviews were an unconstitutional requirement for participation in the Medicaid and Medicare programs.
But Judge Zahid Quraishi of the District of New Jersey wrote in a 26-page opinion that participation in price negotiations and the Medicare and Medicaid markets is voluntary.
The negotiations did not require drugmakers to “defer, hold, or otherwise reserve their drugs for use by the government or Medicare recipients,” he wrote. Quraishi added that the talks would not force manufacturers to physically transport or transport drugs at a renegotiated price.
“Selling to Medicare may be less profitable than it was before the program was implemented, but that doesn’t make sense.” [J&J and Bristol Myers Squibb’s] “The decision to participate is less voluntary,” Quraishi wrote. “For the reasons presented, the court concludes that the program does not result in either physical ingestion or direct appropriation” of medications from the two drug manufacturers.
J&J, Bristol Myers Squibb, Novo Nordisk and Novartis presented their oral arguments before Quraishi during the same hearing in March.
That same month, a federal judge in Delaware rejected AstraZeneca's separate lawsuit challenging the negotiations. In Texas, a third federal judge dismissed a separate lawsuit in February.
A federal judge in Ohio also issued a ruling in September rejecting an injunction from the Chamber of Commerce, one of the country's largest lobbying groups, that sought to block price negotiations before Oct. 1.
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