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

April 30, 2024

A federal judge on Monday threw out legal challenges to the Medicare negotiation program that had been brought by Bristol Myers Squibb and Johnson & Johnson, finding that their claims of unconstitutionality do not hold 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 claimed the program was in violation of the First and Fifth amendments by forcing companies to submit to agreements, amounting to compelled speech, and having their products taken by the government without just compensation.

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

The federal government has continually argued these arguments are moot by the fact that participation in Medicare and negotiations is entirely voluntary, even if choosing not to take part may result in financial consequences for drugmakers.

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

Responding to the Fifth Amendment violation claims, Quraishi determined that the negotiation program was not a “physical taking” of property as the plaintiffs alleged. He disagreed case law plaintiffs cited was relevant to their case and found they had failed to “show how they are being legally compelled to participate in the Program.”

Regarding the claims that participating in the program resulted in compelled speech, Quraishi again cited the voluntary nature of the program as to why he doesn’t believe this argument holds water.

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

The drug companies also complained that by calling the final cost negotiated by the government a “maximum fair price,” any price they list their drugs for outside of negotiation would lead consumers they aren’t “fair” prices.

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

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

Following the ruling on Monday, Health and Human Services Secretary Xavier Becerra said in a statement, “Today’s ruling offers more reason for optimism that we will drive down the cost of prescription drugs in America. Yet another court has upheld the constitutionality of the President’s historic drug price negotiation law. We will continue to vigorously implement the law and defend it in court.”

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

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