Medicare drug price negotiations: Judge rejects AstraZeneca challenge

A federal judge on Friday rejected AstraZeneca‘s legal challenge to Medicare’s new power to negotiate the prices of certain costly prescription drugs with manufacturers.

The decision is another win for the Biden administration in a bitter legal fight with the pharmaceutical industry over the constitutionality of those price talks. The negotiations are a key policy under the Inflation Reduction Act that aims to make medicines more affordable for seniors and could take a bite out of the pharmaceutical industry’s profits.

The legal wrangling over the policy is far from over. Manufacturers have said they intend to escalate the issue to the Supreme Court. 

The judge’s decision came one day before a crucial deadline in the process. 

Manufacturers of the first 10 drugs selected for negotiations have until Saturday to respond to Medicare’s initial price offer for their treatments. Those drugs include AstraZeneca’s Farxiga, which is used to treat Type 2 diabetes, chronic kidney disease and heart failure. 

Final negotiated prices for the first round of drugs will go into effect in 2026. 

In a 47-page opinion, U.S. District Judge Colm Connolly of the District of Delaware said AstraZeneca has not identified a property protected by the constitution that will be jeopardized by the price talks. 

He wrote that AstraZeneca’s participation in the Medicare market is voluntary, so the company’s “desire” or even “expectation” to sell its drugs to the government “at the higher prices it once enjoyed does not create a protected property interest.” 

The opportunity to sell drugs to more than 49 million Medicare and Medicaid beneficiaries is a “powerful incentive” for manufacturers to participate in the price talks with the government, Connolly wrote. But he said that incentive is not “a gun to the…