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A federal judge in New Jersey dismissed the claim on Monday Johnson & Johnson And Bristol Myers Squibb's legal challenges to the Biden administration's Medicare drug price negotiations, ruling that the program is constitutional.
The decision is another victory for the Biden administration in a bitter legal battle with several drugmakers over price talks. The ruling also weakens the pharmaceutical industry's strategy of seeking split decisions in lower courts across the US, which could escalate the issue to the Supreme Court.
Medicare drug price negotiations are a key policy under President Joe Biden's Inflation Reduction Act, which aims to make expensive drugs more affordable for seniors. By doing so, it could take a bite out of drugmakers' profits. Final negotiated prices for the first round of drugs subject to the talks, including one from J&J and Bristol Myers, will take effect in 2026.
J&J and Bristol Myers Squibb did not immediately respond to requests for comment on the ruling.
In separate lawsuits, the drugmakers argued that the negotiations involved an unconstitutional government seizure of their drugs and a violation of their right to freedom of expression. They also argued that the talks are an unconstitutional condition for participating 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 the price talks and the Medicare and Medicaid markets is voluntary.
The negotiations do not require drugmakers to “set aside, store or otherwise reserve their drugs” for use by the government or Medicare beneficiaries, he wrote. Quraishi added that the talks will not force manufacturers to physically ship or transport drugs at a renegotiated price.
“Selling to Medicare may be less profitable than it was before the program was established, but that doesn't matter [J&J and Bristol Myers Squibb’s] The decision to participate is less voluntary,” Quraishi wrote. “For the reasons stated, the Court concludes that the program does not result in a physical taking or direct appropriation” of medications from the two drug manufacturers.
J&J, Bristol Myers Squibb, Novo Nordisk and Novartis presented their oral arguments to Quraishi in New Jersey at the same hearing in March.
That same month, a federal judge in Delaware dismissed AstraZeneca's separate lawsuit challenging the negotiations. Another federal judge in Texas filed a separate lawsuit challenging the price talks in February.
A federal judge in Ohio also issued a ruling in September rejecting a preliminary injunction sought by the Chamber of Commerce, one of the nation's largest lobbying groups, that sought to block price talks before Oct. 1.
