SCOTUS won't hear pharma's IRA complaints

 The US Supreme Court has rejected lawsuits from pharma groups challenging Medicare's drug pricing negotiation powers, saying it will not even hear their arguments.

The decision appears to draw a line under a challenge to Medicare pricing negotiations, signed into law by the 2022 Inflation Reduction Act (IRA), that had been brought by six pharma groups, namely AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Johnson & Johnson, Novartis, and Novo Nordisk.

Under the IRA, the Centers for Medicare & Medicaid Services (CMS) can negotiate prices for select high-expenditure, single-source drugs covered under Medicare Part B and Part D, provided they have been on sale for a minimum set time and have no generic or biosimilar competition.

The price reductions for the first drugs to enter negotiations kicked in at the start of this year and, so far, 25 medicines have had their prices reduced, including Novo Nordisk's semaglutide-based Ozempic for diabetes and Wegovy for weight loss, with 15 more now starting the process.

The pharma companies' complaints challenging the constitutionality of Medicare negotiation on various grounds, including that the negotiations were a sham because there is no way for a manufacturer to object to the prices arrived at by CMS other than withdraw a medicine from Medicare and Medicaid or face a hefty excise tax that can exceed revenues from the drug.

That's a view shared by the US Chamber of Commerce, which has described the negotiations as "illusory" because it relies on "crippling penalties and other tools to coerce manufacturers to sell their property to third parties at below-market prices."

In declining to hear the lawsuits, SCOTUS has effectively endorsed prior appeals court decisions, which in turn backed up district court rulings that the drugmakers had not identified anything protected by constitutional rights that would be jeopardised by the price negotiations.

In essence, the courts have concluded that companies have no constitutionally protected property interest in selling to Medicare at particular prices, as it is a voluntary programme and the government is within its rights to set terms for joining in.

Since the IRA was introduced under the Biden administration, the landscape for drug pricing in the US has evolved with the introduction of Trump's parallel Most-Favoured Nation (MFN) policy, which has resulted in most of the larger pharma groups agreeing to provide discounted medicines to Medicaid in return for the avoidance of tariffs.

https://pharmaphorum.com/news/scotus-wont-hear-pharmas-ira-complaints