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A federal judge in New Jersey rejected it on Monday. johnson & johnson‘sand bristol myers squibIt filed a legal challenge to the Biden administration’s Medicare drug price negotiations, ruling that the program is constitutional.
The decision marks another victory for the White House in a bitter legal battle with several drug companies over price negotiations. The ruling also weakens the drug industry’s strategy of seeking split judgments in lower courts across the country, potentially escalating the issue to the Supreme Court.
Medicare drug price negotiations are a key policy under President Joe Biden’s Inflation Control Act, aimed at making expensive drugs more affordable for seniors. Doing so could harm pharmaceutical companies’ profits. Final negotiated prices for the first round of drugs being negotiated, including one each from J&J and Bristol-Myers, are expected to take effect in 2026.
A J&J spokesperson said in a statement to CNBC that J&J plans to appeal the decision.
“This is a disappointing verdict for patients and for America’s leadership role in medical innovation,” they added.
Bristol-Myers Squibb did not immediately respond to a request for comment on the ruling.
The drug companies argued in a separate lawsuit that the negotiations made the government’s confiscation of their drugs unconstitutional and a violation of their free speech rights. They also argued that the consultation was an unconstitutional condition of participation in the Medicaid and Medicare programs.
But Judge Zahid Quraishi of the District of New Jersey said in a 26-page opinion that price negotiations and participation in the Medicare/Medicaid marketplace are voluntary.
The negotiations do not require drug companies to “set aside, store, or otherwise withhold their drugs” for use by the government or Medicare beneficiaries, he wrote. Quraishi added that the latest negotiations will not force manufacturers to physically ship or transport medicines at the newly negotiated price.
“Sales to Medicare may be less profitable than they were before the program’s creation, but that doesn’t mean they’re any less profitable.” [J&J and Bristol Myers Squibb’s] “For the reasons given, the court concludes that the program does not result in the physical ingestion or direct misappropriation of drugs from the two pharmaceutical companies,” Quraishi wrote.
J&J, Bristol-Myers Squibb, Novo Nordisk and Novartis made oral arguments before Quraishi at the same hearing in March.
That same month, a federal judge in Delaware dismissed another AstraZeneca lawsuit challenging the negotiations. A third federal judge filed a separate case in Texas in February.
In September, a federal judge in Ohio also ruled against a preliminary injunction sought by the Chamber of Commerce, one of the nation’s largest lobbying groups, to block price negotiations through October 1.
