Judge rejects Medicare drug negotiation challenges from Bristol Myers Squibb, Johnson & Johnson

A federal judge on Monday rejected legal challenges to the Medicare negotiation program brought by Bristol Myers Squibb and Johnson & Johnson, concluding that their claims of unconstitutionality do not stand up.

In their two separate lawsuits, both Bristol Myers Squibb and Johnson & Johnson allege that the Medicare negotiation program created through the Inflation Reduction Act violated their constitutional rights.

Specifically, they alleged that the program violated the First and Fifth Amendments by forcing companies to submit to agreements, which amounted to forced speech, and by having their products taken by the government without fair compensation.

Bristol Myers Squibb’s Eliquis and Farxiga products were both named among the first 10 drugs eligible for Medicare negotiation, as were Johnson & Johnson’s Xarelto, Imbruvica and Stelara.

The federal government has continually argued that these arguments are moot because participation in Medicare and negotiations is entirely voluntary, even though choosing not to participate could result in financial consequences for drug manufacturers.

U.S. District Judge Zahid Quraishi appeared to agree with the government’s argument in his opinion.

Responding to allegations of Fifth Amendment violations, Quraishi ruled that the trading program was not a “physical taking” of property, as the plaintiffs alleged. He disagreed that the case law cited by the plaintiffs was relevant to their case and concluded that they had failed to “demonstrate how they are legally required to participate in the Program.”

Regarding allegations that participation in the program resulted in forced speech, Quraishi again cited the voluntary nature of the program and explains why he does not believe this argument is valid.

“First, contrary to Plaintiffs’ interpretation, the Program regulates conduct, not speech. Any
the effect on Plaintiffs’ speech in this case is merely incidental,” he wrote. “Notably, nothing in the statute prevents Claimants from publicly criticizing the Program or final drug prices.”

Pharmaceutical companies have also complained that by calling the government-negotiated final cost the “maximum fair price,” any price they list their drugs for outside of negotiation would lead consumers to think they are not “fair” prices.

Quraishi dismissed these complaints as “public relations problems, not constitutional problems.”

The federal judge issued summary judgment between Bristol Myers Squibb and Johnson & Johnson, declaring the matter closed. Bristol Myers Squibb filed an appeal on the same day as Quraishi’s opinion.

Following Monday’s decision, Health and Human Services Secretary Xavier Becerra said in a statement: “Today’s decision provides more reason for optimism that we will reduce the cost of prescription drugs in America. Yet another court confirmed the constitutionality of the historic presidential drug price negotiation law. We will continue to vigorously implement the law and defend it in court.”

This is the fourth lawsuit challenging the Medicare negotiation that has been rejected. A federal judge in Texas dismissed the lawsuit filed by PhRMA earlier this year.

“This is a disappointing decision for patients and for America’s leadership role in medical innovation. The IRA’s price control provisions will restrict the development of new medicines, limit patient access and choice, and have a negative impact on the overall quality of care. Accordingly, we will appeal this decision,” said a Johnson & Johnson spokesperson when contacted for comment.