Federal Judge To AstraZeneca: You Wanna Sell Drugs To Medicare? Then You Negotiate Prices!
Like, that's literally the law. You don't have to sell any drugs, guys.
The Biden administration chalked up another win in federal court for the Inflation Reduction Act’s provision allowing Medicare to negotiate prices of prescription drugs with manufacturers — something people begged for for decades, and Biden made law. A Trump-appointed federal judge in Connecticut dismissed AstraZeneca’s challenge to the constitutionality of the law, noting that the pharma giant “has no legitimate claim of entitlement to sell its drugs to the Government at any price other than what the Government is willing to pay; its due process claim fails as a matter of law,” so there, tough boogers.
It was the Biden administration’s second court win on the issue after a similar lawsuit was tossed out of federal court in Texas last month. AstraZeneca’s diabetes, kidney disease, and heart failure drug Farxiga — whose cable-TV ads forego a full jingle for a tasteful three-note signature chime — was among the first 10 medications the Centers for Medicare and Medicaid Services (CMS) chose for the price negotiations process; the negotiated price will go into effect starting in 2026. But that doesn’t mean the drug companies are happy about it; they’ve filed 10 federal lawsuits aimed at keeping the price negotiation program from continuing.
In his March 1 opinion, District Court Judge Colm Connolly explained that since AstraZeneca voluntarily chose to participate in the Medicare market, its “‘desire’ or even ‘expectation’ to sell its drugs to the government at the higher prices it once enjoyed does not create a protected property interest,” so it doesn’t have standing to sue.
As Connolly explained, once CMS publishes its list of the costliest drugs for Medicare patients, manufacturers can either agree to negotiate the “maximum fair price” they’ll be paid, or they can choose not to, although the law
provides them a powerful incentive to negotiate a maximum fair price with CMS: If a manufacturer of a selected drug wants to continue to participate in Medicare, it must either agree to negotiate a maximum fair price for that drug or pay an excise tax of at least 65% and up to 95% on all (i.e., both Medicare and non-Medicare) sales of the drug.
AstraZeneca and other manufacturers have complained that “choice” amounts to a Godfather-like offer they can’t refuse, but Connolly said that while the “opportunity to sell products to more than 49 million Medicare and Medicaid beneficiaries” is quite an incentive to accept the negotiation process, it is “not, as AstraZeneca contends, ‘a gun to the head.’ It is a potential economic opportunity that AstraZeneca is free to accept or reject.”
Again, Neener, and also Neener.
As Eric Gardner notes at More Perfect Union, AstraZeneca was doing pretty well selling Farxiga to Medicare during the 13-month period prior to its being selected as one of the first drugs for negotiated pricing:
During that time, Medicare paid AstraZeneca over $3 billion for Farxiga, which helped the London-based pharmaceutical giant record $3 billion in profit last year. […]
“The whole point of the [drug negotiation] program is to lower the prices of selected drugs that lack generic competition and account for a disproportionate share of Medicare's expenses,” Connolly wrote, noting that the company lobbied Congress to not pass the IRA in 2022. “Understandably, drug manufacturers like AstraZeneca don't like the IRA. Lower prices mean lower profits.”
But again, there’s nothing in the Constitution that says prescription drugs are a special sacrosanct category for which federal agencies must pay top dollar. As in civilized countries that actually have universal healthcare — and as with insurance companies in the US market — negotiated pricing is what you accept if you want to be in the game.
AstraZeneca is likely to appeal Connolly’s decision to the Supreme Court, which may not be persuaded by that logic, depending on which Republican appointees have taken vacations with Pharma executives who happen to be very good friends.
In the meantime, during his State of the Union address last week, Joe Biden touted the Medicare drug cost negotiation program as one of his top achievements, and called on Congress to expand it so that when it’s fully rolled out, Medicare can negotiate the prices of as many as 50 prescription drugs each year, instead of the 20 currently allowed by the IRA.
PREVIOUSLY!
[CNBC / More Perfect Union / AstraZeneca Pharmaceuticals v. Becerra opinion]
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My Doctor and I both made the decision that I should get a prescription for a dermatitis med, but a bureaucrat decided I didn't need it. BTW, that bureaucrat is my private insurance company
Who doesn't want older people on Medicare and Social Security to eat cat food to afford their medications?
Think of the poor cat food manufacturers!