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Court dismisses lawsuit challenging Medicare drug price negotiations

The Biden administration is working on forcing the pharmaceutical industry to lower the cost of popular drugs for Medicare Part D recipients.
Court dismisses lawsuit challenging Medicare drug price negotiations
Posted at 10:26 AM, Feb 13, 2024

A federal judge has ruled against the pharmaceutical industry in its attempt to get the court to say the Biden administration's effort to negotiate Medicare drug price prices is unconstitutional. 

Judge David Alan Ezra of the Western District of Texas ruled that the court was not the proper venue for the case. The court said the case could only be heard after the plaintiff's grievances go through an administrative review. 

The ruling does leave open the possibility of future litigation, leaving whether the government can actually set the prices of popular medicines unsettled. 

Earlier this month, the Centers for Medicare & Medicaid Services notified drug companies of the proposed prices for 10 popular medications. Companies can either accept the government's proposed prices or counteroffer. 

SEE MORE: Most Americans don't know their health care costs until receiving care

If companies do not agree with the government on pricing, the two sides will be required to negotiate pricing in the spring and summer of 2024. The prices would then go into effect in 2026. 

The 10 medications up for negotiations include:

- Eliquis (prevention and treatment of blood clots)

- Jardiance (diabetes; heart failure)

- Xarelto (prevention and treatment of blood clots; reduction of risk for patients with coronary or peripheral artery disease)

- Januvia (diabetes)

- Farxiga (diabetes; heart failure; chronic kidney disease)

- Entresto (heart failure)

- Enbrel (rheumatoid arthritis; psoriasis; psoriasis arthritis)

- Imbruvica (blood cancers)

- Stelara (psoriasis; psoriatic arthritis; Crohn's disease; diabetes)

- Fiasp (diabetes)

SEE MORE: Biden administration starts new negotiations on Medicare drug costs

The White House said that these 10 drugs are among those with highest total spending in Medicare Part D.

The ability to allow Medicare to negotiate drug prices was included in the Inflation Reduction Act passed by Congress in 2022. The act also sets a $2,000 price cap on out-of-pocket drug expenses for Medicare Part D enrollees. 

Drugmakers that do not participate in negotiations would be required to withdraw their drugs from the Medicare program or pay an excise tax of at least 65% of their U.S. sales. 

Drugmakers have objected to the law, as several filed lawsuits against the Biden administration in hopes of stopping the negotiations. In September, a federal judge decided not to block the White House's efforts to negotiate prescription prices. 

"Yesterday’s decision in the Western District of Texas is an important step in this Administration’s defense of the law," said White House press secretary Karine Jean-Pierre. "Despite Big Pharma’s attempts to block prescription drug negotiation, the Centers for Medicare and Medicaid Services is moving forward with their critical work to negotiate for lower drug prices for the first 10 drugs selected for the negotiation program. Millions of seniors take these drugs every year for conditions ranging from diabetes to heart disease, blood cancers, Crohn’s disease, and more — and some pay nearly $6,500 per year out of their own pockets for one drug alone."

The Pharmaceutical Research and Manufacturers of America has been among those trying to get the White House's efforts overturned in federal court. 

“This continues to be an exercise to win political points on the campaign trail rather than do what’s in the best interest of patients," PhRMA senior vice president of public affairs Alex Schriver said. "Government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used. This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone.”

After the first round of negotiations, the government will negotiate prices for 15 additional drugs in 2025, 15 more in 2026 and 20 in 2027. All told, Medicare is expected to negotiate pricing on 60 drugs over the next four years, with new prices going into effect by 2029. 

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