A federal judge has ruled against blocking the Biden administration’s implementation of Medicare drug price negotiations. The judge’s decision upholds a controversial process that aims to make expensive medications more affordable for older Americans.

Judge Michael Newman of the Southern District of Ohio denied a preliminary injunction sought by the Chamber of Commerce, a major lobbying group, which aimed to halt the price talks before October 1.

This deadline marks the cutoff for the first 10 drug manufacturers selected for negotiations to agree to participate.

While the judge declined to dismiss the case entirely, he requested the Chamber to amend its complaint by October 13 to clarify certain details. He also gave the Biden administration until October 27 to renew its motion to dismiss the case.

According to the judge, a final determination on standing issues will be made after a short discovery period and any renewed motions to dismiss.

This ruling is seen as a setback for the pharmaceutical industry, which views the process as a threat to its revenue growth, profits, and drug innovation.

The Inflation Reduction Act, passed by President Joe Biden last year, granted Medicare the authority to directly negotiate drug prices with manufacturers for the first time in the program’s history.

While the Chamber and drugmakers like Merck and Johnson & Johnson have filed multiple lawsuits challenging the constitutionality of the negotiations, the Chamber’s suit was the only one seeking a preliminary injunction.

The Chamber’s lawsuit argues that the program violates drugmakers’ due process rights under the Fifth Amendment by allowing the government to dictate prices for their medicines.

According to the Chamber, a precedent established by an appeals court in the 2001 case Michigan Bell Telephone Co. v. Engler requires procedural safeguards when the government sets prices to ensure fair rates and returns on investment for companies.

The Medicare negotiations allegedly lack these safeguards and impose price caps significantly below a drug’s market value, as claimed by the Chamber.

The Chamber’s attorney, Jeffrey Bucholtz, argued that there is a high risk of unfair prices and that drugmakers must either agree to the government-set price or face an excise tax of up to 1,900% of US sales.

However, the Department of Justice (DOJ) lawyers stated that the program is not compulsory. Drugmakers have the option to withdraw voluntary participation in the Medicare and Medicaid programs, avoiding the government-set prices, according to attorney Brian Netter.

Other lawsuits related to this issue are scattered in federal courts across the US. The pharmaceutical industry hopes to obtain conflicting rulings from federal appellate courts, which could expedite the matter to the Supreme Court.

Medicare covers approximately 66 million people in the US, and the drug price negotiations are projected to save the insurance program around $98.5 billion over ten years, according to the Congressional Budget Office.

In August, the Biden administration announced the first round of price talks, involving 10 drugs. The negotiation process will conclude in August 2024, with the reduced prices taking effect in January 2026.

These drugs include blood thinners from Bristol-Myers Squibb and J&J, and diabetes drugs from Merck and AstraZeneca. Additionally, a blood cancer drug from AbbVie, a company represented by the Chamber of Commerce, is also included.

A federal judge has ruled against blocking the Biden administration’s implementation of Medicare drug price negotiations. The judge’s decision upholds a controversial process that aims to make expensive medications more affordable for older Americans.

Judge Michael Newman of the Southern District of Ohio denied a preliminary injunction sought by the Chamber of Commerce, a major lobbying group, which aimed to halt the price talks before October 1.

This deadline marks the cutoff for the first 10 drug manufacturers selected for negotiations to agree to participate.

While the judge declined to dismiss the case entirely, he requested the Chamber to amend its complaint by October 13 to clarify certain details. He also gave the Biden administration until October 27 to renew its motion to dismiss the case.

According to the judge, a final determination on standing issues will be made after a short discovery period and any renewed motions to dismiss.

This ruling is seen as a setback for the pharmaceutical industry, which views the process as a threat to its revenue growth, profits, and drug innovation.

The Inflation Reduction Act, passed by President Joe Biden last year, granted Medicare the authority to directly negotiate drug prices with manufacturers for the first time in the program’s history.

While the Chamber and drugmakers like Merck and Johnson & Johnson have filed multiple lawsuits challenging the constitutionality of the negotiations, the Chamber’s suit was the only one seeking a preliminary injunction.

The Chamber’s lawsuit argues that the program violates drugmakers’ due process rights under the Fifth Amendment by allowing the government to dictate prices for their medicines.

According to the Chamber, a precedent established by an appeals court in the 2001 case Michigan Bell Telephone Co. v. Engler requires procedural safeguards when the government sets prices to ensure fair rates and returns on investment for companies.

The Medicare negotiations allegedly lack these safeguards and impose price caps significantly below a drug’s market value, as claimed by the Chamber.

The Chamber’s attorney, Jeffrey Bucholtz, argued that there is a high risk of unfair prices and that drugmakers must either agree to the government-set price or face an excise tax of up to 1,900% of US sales.

However, the Department of Justice (DOJ) lawyers stated that the program is not compulsory. Drugmakers have the option to withdraw voluntary participation in the Medicare and Medicaid programs, avoiding the government-set prices, according to attorney Brian Netter.

Other lawsuits related to this issue are scattered in federal courts across the US. The pharmaceutical industry hopes to obtain conflicting rulings from federal appellate courts, which could expedite the matter to the Supreme Court.

Medicare covers approximately 66 million people in the US, and the drug price negotiations are projected to save the insurance program around $98.5 billion over ten years, according to the Congressional Budget Office.

In August, the Biden administration announced the first round of price talks, involving 10 drugs. The negotiation process will conclude in August 2024, with the reduced prices taking effect in January 2026.

These drugs include blood thinners from Bristol-Myers Squibb and J&J, and diabetes drugs from Merck and AstraZeneca. Additionally, a blood cancer drug from AbbVie, a company represented by the Chamber of Commerce, is also included.