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A federal judge in New Jersey on Monday rejected Johnson & Johnson And Bristol Myers SquibbLegal challenges to the Biden administration’s Medicare drug price negotiations, ruling that the program is constitutional.
The ruling is another victory for the Biden administration in a bitter legal battle with several drugmakers over price negotiations. The ruling also weakens the pharmaceutical industry’s strategy of obtaining split decisions from lower courts scattered across the United States, which could take the case to the Supreme Court.
Medicare drug price negotiations are a key policy of President Joe Biden’s Inflation Reduction Act, which aims to make expensive drugs more affordable for seniors. In doing so, this could significantly reduce the profits of pharmaceutical companies. The final negotiated prices for the first round of drugs subject to negotiations, which include one from J&J and one from Bristol Myers, will take effect in 2026.
J&J and Bristol Myers Squibb did not immediately respond to requests for comment on the decision.
In separate lawsuits, the drugmakers argued that the negotiations constituted an unconstitutional confiscation of their drugs by the government and a violation of their right to free speech. They also argued that negotiations are an unconstitutional condition 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 marketplaces is voluntary.
The negotiations do not require drugmakers to “set aside, preserve, or otherwise reserve their drugs” for use by the government or Medicare beneficiaries, he wrote. Quraishi added that the negotiations do not require manufacturers to physically transmit or transport the drugs at a new negotiated price.
“Selling to Medicare may be less profitable than before the program was established, but that does not make (J&J and Bristol Myers Squibb’s) decision to participate any less voluntary,” Quraishi wrote. “For the reasons given, the Court concludes that the Program does not result in physical taking or direct appropriation” of the drugs from the two pharmaceutical laboratories.
J&J, Bristol Myers Squibb, Novo Nordisk and Novartis presented their arguments to Quraishi in New Jersey at the same hearing in March.
The same month, a federal judge in Delaware dismissed AstraZeneca’s separate lawsuit challenging the negotiations. Another federal judge in Texas launched a separate lawsuit challenging the price negotiations 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 negotiations before Oct. 1 .
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