Pharma companies face blows in their fight against President Joe Biden-era’s Medicare Program, which President Donald Trump has continued
The U.S. Court of Appeals for the Second Circuit has affirmed a district court’s judgment that dismissed all of Boehringer Ingelheim Pharmaceuticals Inc’s constitutional claims.
Boehringer had alleged that the Medicare Drug Price Negotiation 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.”
The pharma company 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.
However, the appellate court entirely affirmed the district court stating that the constitutional claims failed because participation in the Program was 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 Program, the Chamber of Commerce (CoC) and several state CoCs lost their appeal in 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 Court agreed with the district court that the interests in the lawsuit were “not germane to the purposes of the regional chambers” named as plaintiffs and that they failed to show associational standing. It noted that in some cases, the regional arms of national organizations could have a standing, but in this case, it was not.
It added, “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 would likely be little question that the subject of the suit would be germane to the purpose of the organization.”
The Sixth Circuit Court maintained that the district court did not err in dismissing the case for improper venue, rather than transferring it.
In 2023, the opponents of the Program, including the CoC, in its original lawsuit over the plan, argued that it could not be characterized as a voluntary negotiation since the affected companies would be subject to onerous excise taxes for refusing to participate. Also, because it would have devastating consequences for patients if companies were to pull the affected drugs.
The CoC further alleged that the IRA disguised a mandatory pricing control regime as a negotiation process (which was not voluntary). This was due to statutory difficulties for drug manufacturers attempting to leave the Program with up to 1900 percent tax penalty on daily sales for non-cooperating drug companies.
The statement issued by CoC said that it disagreed with the Sixth Circuit’s decision.
Andrew Varcoe, Deputy Chief Counsel for the Chamber’s Litigation Center, said the Chamber was reviewing the decision and considering next steps.
The statement added, “We 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.”
Meanwhile, a patient advocacy group, Patients for Affordable Drugs (P4AD), lauded the two decisions, marking the Second Circuit ruling “a decisive win for patients.”
Merith Basey, Executive Director, P4AD, called the Sixth Circuit’s decision “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 will be applicable in 2026. On 14 March 2025, CMS announced, “The 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 the negotiation.” The agreed prices will become effective in 2027.