Court Upholds Medicare Drug Price Negotiation Program, Rejecting novo Nordisk Challenge
PHILADELPHIA – A three-judge panel of the U.S. Court of Appeals for the Third Circuit has ruled against Novo Nordisk in its challenge to the way Medicare selects drugs for price negotiation under the Inflation Reduction Act. The decision, issued today, affirms the Biden management’s approach and allows Medicare to negotiate lower prices for a possibly wider range of drugs.
The lawsuit centered on Novo Nordisk’s argument that Medicare improperly grouped six of its insulin products as a single unit for negotiation, despite each containing the same active ingredient. Novo contended the government should negotiate prices for each product separately. The court ruled that the Inflation Reduction Act does not permit judicial review of Medicare’s drug selection process.
Medicare was initially authorized to select 10 drugs for negotiation in the first year, expanding to 15 additional drugs, and ultimately 20 new drugs annually. The ruling impacts not only the first round of negotiations, which included insulin products, but also the second round where Medicare grouped Novo Nordisk’s Ozempic, Rybelsus, and Wegovy – all containing semaglutide – together.
The decision could also influence a potential policy under consideration by the Trump administration, which would consider products eligible for negotiation even with minor ingredient modifications if they don’t result in clinically meaningful differences. Medicare officials had indicated they might adopt this approach, potentially impacting drugs like hyaluronidase combination biologics. However, implementation of that policy has been delayed by the Trump administration until at least next year.
The case raises questions about the fifth Amendment’s due process clause and the Eighth amendment’s prohibition on ”excessive” government fines, as pharmaceutical companies argue the price negotiation program constitutes a taking of property rights. PhRMA, the pharmaceutical industry lobby, has also filed suit against the Biden administration over the program.
