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Biden Drug Price Negotiation Policy Survives Key Legal Fight (2) [1]
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Date: 2024-03
The Biden administration secured another major win Friday in its battle to defend a government drug price-setting program after a federal judge struck down administrative and constitutional claims brought by AstraZeneca.
Chief Judge Colm F. Connolly for the US District Court for the District of Delaware ruled AstraZeneca PLC doesn’t have Article III standing to challenge the lawfulness of the government’s scheme and “has not identified a property interest protected by the Constitution that is put in jeopardy by the Program.”
AstraZeneca in August 2023 challenged the Medicare Drug Price Negotiation Program authorized by the 2022 Inflation Reduction Act, which allows the government to set prices on some of the costliest prescription drugs Medicare covers. Its drug Farxiga, used to treat Type 2 diabetes, was one of the 10 drugs selected last year in the first negotiation round of the program.
Connolly, appointed by former President Donald Trump, denied AstraZeneca’s motion for summary judgment and granted the government’s cross-motion for summary judgment.
“Because AstraZeneca’s participation in Medicare is not involuntary, AstraZeneca does not have a protected property interest in selling drugs to the Government at prices the Government will not agree to pay. Accordingly, AstraZeneca’ s due process claim fails as a matter of law,” the judge wrote.
Among other cases, Connolly pointed to Dayton Area Chamber Commerce v. Becerra on how “participation in the Medicare program is a voluntary undertaking,” and neither the Inflation Reduction Act nor any other federal law requires AstraZeneca to sell its drugs to Medicare beneficiaries.
Connolly determined in his opinion that the court lacks jurisdiction under AstraZeneca’s Counts I and II under Article III, which are the manufacturers’ Administrative Procedures Acts claims.
“There are many flaws in this argument. To begin with, its legal premises are wrong,” Connolly wrote in regard to one of the Administrative Procedure Act claims, and the “harm alleged here is too vague to establish a cognizable injury.”
“In this case, AstraZeneca’s alleged injury is premised on a hypothetical scenario that could only be realized if AstraZeneca were to develop a new formulation or use of Farxiga’s active moiety, if the FDA approved that new formulation or use under a new NDA, and if Farxiga were still a selected drug for the Program at that (unknown) time,” the judge wrote.
A spokesperson for AstraZeneca said the company is actively evaluating its path forward after the ruling.
“We are disappointed with the court’s decision and the potential negative impact it will have on patients’ access to future life-saving medicines. We believe our challenge is necessary to support and improve patients’ access to future life-saving medicines, and our rights as a company,” the spokesperson said in a statement.
AstraZeneca’s Argument
The court’s decision shows how “flimsy” the challenges against the Inflation Reduction Act are so far, said Andrew Twinamatsiko, a director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute.
“I don’t think AZ had a good due process claim to begin with. To succeed in a due process claim, you have to show that you have an entitlement and that the government is depriving you of that entitlement,” Twinamatsiko said.
Two of AstraZeneca’s claims against the Centers for Medicare & Medicaid Services alleged the agency violated the Administrative Procedure Act by overriding the Medicare statute’s definition of “qualifying single source drug,” so that the term impermissibly includes two different drugs approved at different times.
The “bona fide marketing” requirement also sweeps drugs into the selection process even when they have generic competition, keeping them subject to the discounted price longer, the drugmaker argued.
The drugmaker’s third claim alleged the program violates due process under the Fifth Amendment.
AstraZeneca urged-bsp-article-citation> the court to grant its motion for summary judgment and vacate certain portions of the program’s initial and final revised guidance, along with declaring the price-setting provision violates due process.
The US Department of Justice attorneys, on behalf of the CMS, asked the court to toss the Administrative Procedure Act claims and enter judgment in its favor on due process grounds.
Patients For Affordable Drugs, an independent national patient organization focused on achieving policy changes to lower the price of prescription drugs, said the ruling sends a “clear message that Big Pharma’s greed cannot continue to be prioritized over patients’ well-being.”
“The judge’s decision reaffirms that pharmaceutical companies, like AstraZeneca, have the option to participate in Medicare voluntarily, accepting slightly lower negotiated prices if they wish to access a market worth billions,” Merith Basey, executive director of Patients For Affordable Drugs, said in a statement.
Connolly granted Patients For Affordable Drugs, along with other advocacy groups, to file an amicus brief one day before his decision.
Another Pharma Loss
AstraZeneca’s loss is another setback for the pharmaceutical industry among the lawsuits challenging the program. A federal judge in Texas dismissed Nat’l Infusion Ctr. v. Becerra for lack of jurisdiction, and a federal judge in Ohio struck down a preliminary injunction that would have halted the program.
Similar suits brought by manufacturers and industry groups are pending for Johnson & Johnson , Bristol Myers Squibb & Co. , Novo Nordisk A/S , Novartis AG , Merck & Co. , Boehringer Ingelheim , and the Dayton Area Chamber of Commerce in Ohio.
The case is AstraZeneca Pharm. LP v. Becerra, D. Del., No. 1:23-cv-00931, memorandum opinion 3/1/24.
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[1] Url:
https://news.bloomberglaw.com/health-law-and-business/astrazeneca-suffers-loss-in-drug-price-negotiation-challenge
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