Split Third Circuit Upholds Medicare Price Negotiation Program Under Biden IRA

"The U.S. Court of Appeals for the Third Circuit in a split decision today affirmed a district court ruling granting summary judgment to the U.S. government that the imposition of a Medicare Drug Price Negotiation Program via the Inflation Reduction Act (IRA) does not violate Bristol Myers Squibb (BMS) and Janssen Pharmaceuticals' constitutional rights. Judge Thomas Hardiman dissented. The underlying case was brought by BMS and Janssen in the U.S. District Court for the District of New Jersey."

"On appeal, the plaintiffs argued that the IRA: "1) effects an uncompensated taking of their property, (2) compels speech in violation of the First Amendment, and (3) imposes unconstitutional conditions on participation." The IRA, enacted in 2022, was designed as a way to reduce the federal budget deficit while simultaneously lowering prescription drug prices for eligible patients. While some celebrated the bill, pharmaceutical companies and IP advocates have been strongly opposed."

""The whole point of the Program is to obtain medicines for Medicare beneficiaries without the need for the government to pay fair market value," BMS wrote in its opening brief to the Third Circuit last September. In addition to allegations that the IRA compels drug manufacturers to provide Medicare with "access" to their leading medicines at steep discounts, effectuating an unconstitutional taking in violation of the Fifth Amendment,"

The U.S. Court of Appeals for the Third Circuit in a split decision affirmed a district court ruling granting summary judgment to the U.S. government that the Medicare Drug Price Negotiation Program under the Inflation Reduction Act does not violate Bristol Myers Squibb and Janssen Pharmaceuticals' constitutional rights. Plaintiffs alleged the IRA effects an uncompensated taking, compels speech, and imposes unconstitutional participation conditions. The IRA was enacted in 2022 to reduce the federal deficit and lower prescription drug prices for eligible patients, and pharmaceutical companies and IP advocates opposed the law. BMS argued the Program forces steep discounts and coerces manufacturers, while Judge Thomas Hardiman dissented.

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