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Drug Price Negotiations, Counteroffers, and Lawsuits

In a move that will come as little surprise, all pharma companies with a product named in Medicare’s drug price negotiation program have made a counteroffer.

The US government sent out the first round of offers for the 10 drugs in the program on February 1, 2024. Further negotiations will now need to take place, with the government looking to publish the new prices by September 1. In a statement, The Department of Health and Human Services Secretary Xavier Becerra described the process as “good-faith, up-front negotiations.” The final prices will take effect in 2026. 

The drugs included in the program are:

  • Eliquis (BMS)
  • Enbrel (Amgen)
  • Farxiga (AstraZeneca)
  • Fiasp/NovoLog (Novo Nordisk)
  • Entresto (Novartis)
  • Imbruvica (Pharmacyclics and Janssen)
  • Januvia (MSD)
  • Jardiance (Boehringer Ingelheim & Eli Lilly)
  • Stelara (Janssen)
  • Xarelto (Janssen)

The goal of the IRA is to bring down costs for patients, but the program has been met by significant resistance – and lawsuits. So far, however, these lawsuits have been unsuccessful.

Most recently, AstraZeneca’s challenge to the program was rejected by a judge on March 1. AstraZeneca had argued that the IRA violated its constitutional rights and the Administrative Procedure Act. In the decision, Chief Judge Colm F. Connolly wrote, “The IRA's Drug Price Negotiation Program operates much like the 340B Program. The IRA offers a powerful incentive – the opportunity to sell products to more than 49 million Medicare and Medicaid beneficiaries – to induce drug manufacturers to participate in the Program and negotiate with CMS maximum fair prices for selected drugs. That incentive is not, as AstraZeneca contends, ‘a gun to the head.’ It is a potential economic opportunity that AstraZeneca is free to accept or reject.”

In February, a judge in Texas also threw out a joint lawsuit from PhRMA, the Global Colon Cancer Association, and the National Infusion Center Association (NICA) – because NICA did not have jurisdiction on the matter.

And at the end of 2023, a judge also denied the US Chamber of Commerce’s request for a preliminary injunction to block the negotiation process.

Other lawsuits remain ongoing. However, a Bloomberg article explained that opponents of the IRA may face an uphill battle.

What people in support of the IRA say:

Merith Basey, executive director of Patients For Affordable Drugs: “We are encouraged but not surprised that the court has rejected AstraZeneca’s self-serving arguments and essentially said the company didn’t have a leg to stand on. This ruling sends a clear message that Big Pharma’s greed cannot continue to be prioritized over patients’ well-being and underscores the importance of Medicare negotiation to begin to rein in exorbitant drug prices. The judge’s decision reaffirms that pharmaceutical companies, like AstraZeneca, have the option to participate in Medicare voluntarily, accepting slightly lower negotiated prices if they wish to access a market worth billions. Once again, a judge has reviewed drug company claims, and the result has gone against the drug company and for the people of the United States.” 

Chiquita Brooks-LaSure, Medicare & Medicaid Services administrator: “CMS is dedicated to improving access to some of the most expensive drugs for people with Medicare while encouraging market competition and fostering innovation through this first of its kind negotiation process. Receiving counteroffers marks another negotiation milestone met in the continued implementation of the landmark Inflation Reduction Act, which is already lowering drug prices for people with Medicare.”

What opponents of the IRA say:

Neil Bradley, executive vice president and chief policy officer at the US Chamber of Commerce: "You can’t call it a negotiation when the federal government has the ability to force you to accept their price or face an excise tax that can total 1900% of all your sales. But the real costs will be paid by American patients. In fact, new research projects upwards of 44% fewer new medical product launches in the United States due to the government’s price control scheme.”

Alex Schriver, senior vice president of public affairs at PhRMA: “This continues to be an exercise to win political points on the campaign trail rather than do what’s in the best interest of patients. Government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used. This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone.”

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