The United States District Court for the District of Delaware recently rejected AstraZeneca’s lawsuit challenging the authority granted to Medicare in the Inflation Reduction Act. AstraZeneca filed a lawsuit last summer, arguing that the pricing provisions in the Inflation Reduction Act violate due process protections by setting a “maximum fair price” for a prescription medication.
AstraZeneca filed its lawsuit in response to its diabetes drug Farxiga being targeted as one of the first ten products subjected to price negotiations with the United States government. AstraZeneca argued that Medicare unlawfully defined a “single source” drug as any dose or formulation of a specific active drug ingredient. That definition allowed the Centers for Medicare and Medicaid Services (CMS) to improperly apply the definition to all formulations and dosages of AstraZeneca’s drug Farxiga without accounting for the possibility that the drug would face generic competition in 2026.
The District Court rejected both of AstraZeneca’s arguments, first saying that the company did not have standing to challenge the lawfulness of the guidance and because it has not identified a property interest that is protected y the Constitution that is in jeopardy by the Program. He further noted that participation in Medicare is voluntary and AstraZeneca is not “entitled to sell the government drugs at prices the government won’t agree to pay.” He also referred to potential generic competition as “speculative.”
Other Pending Lawsuits
AstraZeneca wasn’t the only company to sue over the Inflation Reduction Act’s pricing provisions. Merck & Co., Bristol Myers Squibb, Johnson & Johnson, Novartis, Novo Nordisk, and Boehringer Ingelheim also filed lawsuits, as did the Pharmaceutical Research and Manufacturers of America (PhRMA). The lawsuit filed by PhRMA was dismissed due to lack of standing.
Bristol Myers Squibb, Johnson & Johnson, Novartis, and Novo Nordisk all presented oral arguments together in early March 2024, arguing against the Inflation Reduction Act. The judge in that hearing seemed somewhat skeptical of the arguments advanced, including arguments that the case “go[es] beyond drug prices and this particular statute,” with the government “advanc[ing] the extreme position that there can be no constitutional violation whenever a party has elected to participate in a federal benefit program.” The companies further argued that the statute at issue in the case “is unprecedented because it strips away many constitutional safeguards that are essential to protecting private rights, ensuring accountability, and safeguarding the public interest” and the “constitutional problems are reinforced by the lengths to which the government has gone to obscure the statutes requirements.”