A federal judge in Austin, Texas, has thrown out a lawsuit brought by pharmaceutical industry bodies challenging a new program that allows the government to negotiate prices for some expensive drugs under Medicare.
On Monday, U.S. District Judge David Ezra, appointed by Ronald Reagan, sided with the Biden administration in dismissing a lawsuit by the Pharmaceutical Research and Manufacturers of America (PhRMA) group and two others that claimed the program was unconstitutional.
PhRMA said it was "disappointed" with the ruling, while the Biden administration still faces other legal challenges to the program in other courts.
Under the initiative, passed under the Inflation Reduction Act, the Department of Health and Human Services is directed to seek lower fixed prices for certain drugs, saving government funds on serving Medicare patients.
But pharmaceutical companies that refuse to participate in the scheme would either have to pay large fines or withdraw from Medicare—which covers 66 million, mostly older, Americans who account for a large share of prescription spending.
PhRMA, the Global Colon Cancer Association (GCCA) and the National Infusion Center Association (NICA) had argued that the program would unconstitutionally levy excessive fines, which could range from over 185 percent to 1,900 percent of a drug's price depending on the duration of noncompliance and would be based on the drug's total sales including those beyond Medicare.
While Ezra had agreed that the program could possibly do harm to the companies in earlier rulings, he granted the government's motion to dismiss on Monday because the claims brought against it arose under the Medicare Act—meaning they could only be heard by a court after an administrative review.
"We are disappointed with the court's decision, which does not address the merits of our lawsuit, and we are weighing our next legal steps," PhRMA spokesperson Nicole Longo told Reuters following the ruling.
A spokesperson for NICA said it too was disappointed by the decision, telling Newsweek: "We will continue to explore all options to protect infusion centers and preserve access to provider-administered medications outside the hospital."
Newsweek also approached GCCA via email for comment on Tuesday.
The ruling marked a further victory for the Biden administration in its ongoing defense of the program, which the Congressional Budget Office estimates will save $25 billion a year by 2031.
In September, another judge in Ohio declined to block the law after a lawsuit was brought by the U.S. Chamber of Commerce business lobby group.
But several other lawsuits, brought by large pharmaceutical companies such as Johnson & Johnson and AstraZeneca, remain and could end up at the U.S. Supreme Court.
Meanwhile, in January, the Food and Drug Administration (FDA) authorized the state of Florida to import prescription drugs from Canada due to the high price of drugs in America, which as of 2018 were on average 256 percent more than in 32 comparable countries.
While pharmaceutical representative bodies like PhRMA questioned the safety of the move, experts suggested the policy was a blow to American pharmaceutical companies' hold on the U.S. medicines market and could pave the way for other states to follow suit.
Update 2/13/24, 4:30 a.m. ET: This article was updated to include further information.
Update 2/20/24, 3:55 a.m. ET: This article was updated to include comment from a NICA spokesperson.
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