Supreme Court Hands Major Blow To Big Pharma's Fight Against Biden-Era Medicare Drug Pricing Law

The U.S. Supreme Court on Monday declined to hear a pharmaceutical industry challenge to the Medicare drug price negotiation program created under former President Joe Biden's Inflation Reduction Act, according to Reuters.

The justices rejected appeals from drugmakers including Novo Nordisk (NYSE:NVO), AstraZeneca Plc’s (NASDAQ:AZN), Bristol-Myers Squibb Co. (NYSE:BMY), Novartis (NYSE:NVS)  and Janssen Pharmaceuticals, a unit of Johnson & Johnson (NYSE:JNJ), leaving lower-court rulings in favor of the federal government in place.

The companies argued the program imposed government-dictated price controls and threatened innovation. Reuters reported that the drugmakers also claimed the policy violated constitutional protections for due process, free speech and property rights.

The Medicare negotiation framework allows the Centers for Medicare & Medicaid Services, or CMS, to negotiate prices directly with manufacturers for certain high-cost medicines covered under Medicare. Companies that refuse to participate could face steep excise taxes or withdraw products from Medicare programs.

Program Expands

The first negotiated prices for 10 drugs already took effect this year.

Earlier this year, CMS selected 15 additional high-cost drugs for the third cycle of negotiations, including treatments from Eli Lilly And Co. (NYSE:LLY), Pfizer Inc. (NYSE:PFE), AbbVie Inc. (NYSE:ABBV), Gilead Sciences, Inc. (NASDAQ:GILD) and Johnson & Johnson (NYSE:JNJ). The latest round also marked the first time the program expanded into Medicare Part B physician-administered drugs.

The Trump administration has continued defending the Biden-era pricing mechanism as part of its broader effort to reduce prescription drug costs.

CMS previously estimated that negotiated prices from the second cycle could have reduced Medicare spending by roughly $8.5 billion in 2024.

"Under President Trump's leadership, CMS is taking strong action to target the most expensive drugs in Medicare," CMS Administrator Mehmet Oz said in January while announcing the latest negotiation cycle, according to Reuters.

Pricing Debate

White House economists previously estimated that the administration's broader drug-pricing framework could generate roughly $529 billion in savings over the next decade, while Medicaid savings could total approximately $64.3 billion.

Sen. Peter Welch (D-Vt.) recently voiced support for the administration's "most favored nation" drug pricing model, calling for Congress to formally advance the proposal.

Reuters noted that Americans pay more for prescription drugs than people in any other country.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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