In a notable development Friday, a lawsuit challenging the U.S. law requiring drug price negotiations for Medicare was revived by the U.S. Court of Appeals for the 5th Circuit. The lawsuit, brought by Pharmaceutical Research and Manufacturers of America and other pharmaceutical and health care industry groups, seeks to challenge the first-of-its-kind U.S. law that requires drug companies to discuss drug prices with Medicare, a program that serves 66 million people.
The New Orleans-based appeals court’s decision did not address the merits of the legal challenge. Instead, it overturned a Texas federal judge’s February decision to dismiss the case on jurisdictional grounds. The judge had previously ruled that the National Infusion Center Association (NICA), one of the plaintiffs that argued its members would suffer financial losses because of the new drug pricing, must first bring its reimbursement disputes before the Department of Health and Human Services (HHS) as required by federal Medicare law.
However, the 5th Circuit panel, in a 2-1 decision, held that NICA’s grievances arise under the Inflation Reduction Act rather than the Medicare law, and that it was therefore not required to present its case to HHS in advance. Circuit Judges Jennifer Walker Elrod and Kyle Duncan, both appointed by Republican presidents, wrote the majority opinion, while Circuit Judge Irma Ramirez, a nominee of President Joe Biden, dissented, siding with the district judge’s original reasoning.
The revived lawsuit is one of at least eight legal attempts to block the drug price negotiation program, which is a key initiative of the Biden administration passed as part of the Inflation Reduction Act. Despite those legal challenges, the first round of price negotiations has continued, with the administration last month revealing price cuts ranging from 79% to 38% on 10 drugs. Those include Merck & Co.’s diabetes drug Januvia and Novo Nordisk’s (NYSE:NVO) insulin products, with the new prices set to take effect in 2026.
At this time, HHS, which administers the negotiation program, has not commented on the appeals court’s decision. Plaintiffs, including the Global Colon Cancer Association and NICA, also have not provided statements regarding the outcome.
Reuters contributed to this article.
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