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A federal judge in Texas on Monday rejected a lawsuit brought by a major pharmaceutical industry trade group to halt negotiations over Medicare drug prices, handing the Biden administration a major victory in its plans to implement key health policy reform in recent history.
The U.S. District Court for the Western District of Texas dismissed the lawsuit filed by the Pharmaceutical Research and Manufacturers of America (PhRMA) along with the National Infusion Center Association (NICA) and the Global Colon Cancer Association in June 2023.
In his ruling, Judge David Alan Ezra said the court had no jurisdiction over NICA’s claims against the price negotiation process.
“The Court has no jurisdiction over NICA claims because the claims here ‘arise under’ the Medicare Act, and the claims do not fall within the exception provided for when claims can completely avoid judicial or administrative review. Therefore, NICA’s claims are rejected without prejudice,” Ezra wrote.
His ruling marks the first time a court has struck down a legal challenge to legislation implemented last year under President Biden’s Inflation Reduction Act. Another eight cases presented by major pharmaceutical companies, such as Merck (NYSE:MRK) and Bristol Myers (NYSE:BMY), are still pending.
Founded in 1958, PhRMA includes companies such as Pfizer (NYSE:PFE), Lilly (NYSE: LLY), Amgen (AMGN), Roche (OTCQX:RHHBY), GSK (GSK), J&J (JNJ) and Biogen (BIIB) as members.
In August, the Centers for Medicare and Medicaid Services (CMS) announced the top 10 Medicare Part D drugs selected for the initial round of negotiations, which will lead to a review of prices paid by the federal healthcare program in 2026.
The list included blockbuster therapies from Bristol Myers (BMY), Pfizer (PFE), Eli Lilly (LLY), AbbVie (ABBV), Johnson & Johnson (JNJ), AstraZeneca (AZN), Novartis (NVS) (OTCPK:NVSEF ), Merck (MRK), Amgen (AMGN) and Novo Nordisk (NVO) (OTCPK:NONOF).
Earlier this month, CMS sent initial price offers to companies selected for the program.