Appellate Challenges to Medicare Drug Price Negotiation Program Fail

Pharmaceutical companies were dealt back-to-back blows over the last 24 hours in their fight against the Biden-era Medicare Drug Price Negotiation Program, which the Trump Administration has continued.

In one decision, published today, the U.S. Court of Appeals for the Second Circuit affirmed a district court’s judgment that dismissed all of Boehringer Ingelheim Pharmaceuticals, Inc.’s constitutional claims, which alleged that the Program:  “(1) violates its Fifth Amendment right to procedural due process, (2) effects a per se physical taking of its Jardiance product in violation of the Fifth Amendment, (3) compels speech in violation of the First Amendment, (4) violates the Excessive Fines Clause of the Eighth Amendment, and (5) unconstitutionally conditions its participation in Medicare and Medicaid on the relinquishment of its constitutional rights.” Boehringer also alleged the Centers for Medicare and Medicaid Services (CMS) violated the Administrative Procedures Act (APA) by failing to engage in notice and comment rulemaking on the subject.

But the appellate court affirmed the district court in full, explaining that the constitutional claims fail because participation in the Program is voluntary, because the government does not regulate Boehringer’s conduct in the private market, and because the Inflation Reduction Act (IRA), which gave rise to the Program, “expressly authorized CMS to implement the program during its first three years without following the APA’s notice-and-comment requirement.”

In another case challenging the Negotiation Program, the U.S. Chamber of Commerce and several state chambers of commerce lost their appeal to the U.S. Court of Appeals for the Sixth Circuit seeking to overturn a district court ruling that dismissed the case for improper venue.

The Sixth Circuit agreed with the district court that the interests in the lawsuit are “not germane to the purposes of the regional chambers” named as plaintiffs and that they failed to show associational standing. While the opinion noted that regional arms of national organizations may well in some cases be able to show standing, here, that is not the case. “For example, if the regional arm of a civil-rights organization located in a border city sued to challenge the constitutionality of a federal immigration law or action directly affecting that city, there likely would be little question that the subject of the suit would be germane to the purpose of the organization,” wrote the Sixth Circuit. The district court also did not err in dismissing the case for improper venue, rather than transferring it, it added.

Opponents of the Medicare Drug Price Negotiation Program, including the U.S. Chamber, in its original lawsuit over the plan in June 2023, argue it cannot be characterized as a voluntary negotiation since the affected companies would be subject to onerous excise taxes for refusing to participate and because it would have devastating consequences for patients if companies were to actually pull the affected drugs.

The Chamber further alleged that the IRA is essentially disguising a mandatory pricing control regime as a negotiation process that has no voluntary nature due to statutory difficulties for drug manufacturers attempting to leave the Medicare program, as well as a tax penalty on non-cooperating drug companies up to 1900% of daily drug sales.

In a statement issued yesterday, the Chamber said they disagree with the Sixth Circuit’s decision. Andrew Varcoe, Deputy Chief Council for the Chamber’s Litigation Center, said the Chamber is reviewing the decision and “considering next steps.” The statement added:

“We respectfully disagree with the court’s opinion that the Dayton Area, Ohio, and Michigan Chambers of Commerce have no interest in challenging price controls that have adverse impacts across the nation. State and local chambers know best how federal policies affect businesses in their cities and states. While we support affordable health care, the price controls that we are challenging would reduce access to new medicines that Americans are counting on, and would set a devastating precedent for all U.S. businesses.”

Patient advocacy group Patients for Affordable Drugs (P4AD), meanwhile, cheered the two decisions, calling the  Second Circuit ruling “a decisive win for patients.” And P4AD Executive Director Merith Basey touted the Sixth Circuit’s decision as “the 10th court ruling in favor of patients and against the pharmaceutical industry’s desperate legal attacks on the overwhelmingly popular Medicare Negotiation Program, which in January will deliver lower prices to more than 9 million patients across the nation.”

The first 10 drugs were selected in 2023 and the negotiated prices become applicable in 2026. On March 14, 2025, CMS announced that “agreements have been signed with drug companies manufacturing all 15 drugs covered under Medicare Part D (PDF) that were selected for the second cycle of negotiation.” Those agreed prices will become effective in 2027. 

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Author: robeo123