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A federal judge in New Jersey on Monday dismissed the Johnson & Johnson and Bristol-Myers SquibbA legal challenge to the Biden administration’s Medicare drug price negotiations has ruled that the plan is constitutional.
The decision is another victory for the Biden administration in its fierce legal battle with multiple drugmakers over price negotiations. The ruling also undercuts the drug industry’s strategy of seeking divisive rulings in lower courts across the United States, which could escalate the issue to the Supreme Court.
Medicare drug price negotiations are a key policy component of President Joe Biden’s Inflation Reduction Act, which aims to make expensive drugs more affordable for seniors. Doing so could reduce drugmakers’ profits. Final negotiated prices for drugs from the first round of negotiations, which include drugs from J&J and Bristol Myers, will take effect in 2026.
Johnson & Johnson and Bristol-Myers Squibb did not immediately respond to requests for comment on the ruling.
In separate lawsuits, the drug companies argued that the negotiations were an unconstitutional government seizure of their drugs that violated their free speech rights. They also argue that negotiations are an unconstitutional condition of participation in the Medicaid and Medicare programs.
But New Jersey District Judge Zahid Quraishi wrote in a 26-page opinion that participation in price negotiations and the Medicare and Medicaid marketplaces is voluntary.
He wrote that the negotiations do not require drug companies to “hold, withhold or otherwise withhold any drugs” for use by the government or Medicare beneficiaries. Quraishi added that the negotiations would not force manufacturers to actually ship or ship drugs at the new negotiated prices.
“Profits from selling to Medicare may be lower than they were before the program was implemented, but that does not mean that the decision (by Johnson & Johnson and Bristol-Myers Squibb) to participate in the program becomes any less voluntary,” Quraishi wrote. For the reasons provided, the court concluded that the scheme would not result in actual acquisition or direct appropriation of the two drug manufacturers’ drugs.
Johnson & Johnson, Bristol-Myers Squibb, Novo Nordisk and Novartis presented oral arguments to Quraishi of New Jersey at the same hearing in March.
That same month, a federal judge in Delaware dismissed a separate lawsuit by AstraZeneca challenging the negotiations. Another federal judge in Texas dismissed another lawsuit challenging price negotiations in February.
A federal judge in Ohio also issued a ruling in September rejecting a preliminary injunction sought by the Chamber of Commerce, one of the nation’s largest lobbying groups, to block price negotiations before Oct. 1.
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