'No one is entitled to sell the Government drugs at prices the Government won't agree to pay,' federal judge rules...
By Ernest A. Canning on 3/6/2024, 10:35am PT  

In the second loss for Big Pharma in less than a month, the Trump-appointed Chief Judge of the Delaware U.S. District Court rejected a Constitutional challenge to a law adopted by Democrats in Congress and signed by President Joe Biden which allows for the negotiation of drug prices for Medicare.

Last week, in a 45-page Memorandum Opinion issued in AstraZeneca Pharmaceuticals v. Becerra, Chief Judge Colm F. Connolly summarily rejected the drug manufacturer's assertion that provisions of the Inflation Reduction Act of 2022 (IRA), authorizing the Centers for Medicare and Medicaid Services (CMS) to negotiate prescription drug prices, violates the pharmaceutical industry's 5th Amendment rights.

The 5th Amendment provides that no person shall "deprived of...property without due process of law." A person (in this instance, a corporation) cannot be unlawfully deprived of a property right that does not exist.

The IRA, which President Biden signed into law on Aug. 16, 2022 --- an Act that every House Republican opposed --- reversed a provision of the Medicare Part D law, enacted in 2003 during the George W. Bush administration, which statutorily prevented CMS from negotiating prescription drug prices.

According to a press release issued by the Department of Health and Human Services (HHS), the government's ability to negotiate pricing is essential given that "the United States pays three times more for prescription drug prices than any other developed nation." The conservative federal judge in Delaware ruled that the 5th Amendment due process clause doesn't create a pharmaceutical property right to force the federal government to agree to pay those higher prices...

The suit was filed in response to an HHS determination to subject the patented diabetes, kidney and heart drug, Farxiga, to price negotiations.

Judge Connolly observed that Farxiga accounted for $3.2 billion of Medicare Part D's gross-coverage over the preceding year. It was one of ten name-brand drugs that had been selected for CMS price negotiations. The federal government shelled out "anywhere from $227 million to $6.5 billion" for research and development (R&D) on each of those ten patented meds, according to Jacobin's Helen Santoro.

As we previously reported, prior to President Ronald Reagan's 1987 Executive Order, patent rights for pharmaceuticals that were the product of federally-funded R&D belonged to the U.S. Government. Reagan's Executive Order gifted the patent rights of government funded new drugs to the pharmaceutical industry.

For greedy pharmaceutical companies, it's not enough that our tax dollars subsidize the development of their patented drugs. AstraZenica insisted that the government doesn't have the right to negotiate the price Medicare, and its beneficiaries, pay for those name brand medications.

The court ruled that AstraZeneca lacked Article III standing because it failed to establish a cognizable injury. But the judge also went on to summarily reject the company's assertion that it has a "property interest" that entails "the ability to sell products to Medicare beneficiaries at prices above what the Inflation Reduction Act requires"...

No one...is entitled to sell the Government drugs at prices the Government won't agree to pay. [Citation]….Just like private individuals and businesses, "the Government enjoys the unrestricted power to produce its own supplies, to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases". [Citation]. Neither the Inflation Reduction Act nor any other federal law requires AstraZeneca to sell its drugs to Medicare beneficiaries.

When it comes to price negotiations, CMS has the upper hand. The court's opinion reflects the availability of FDA-approved generic substitutes for Farxiga. So, CMS will not be placing the health of Medicare beneficiaries at risk by refusing to pay wildly inflated prices for the name brand medication.

While not directly before the court, the above-quoted language set forth by Chief Judge Connolly not only supports the right of the federal government to negotiate prescription drug prices, but also supports California's effort to counter the pharmaceutical industry's price gouging by manufacturing its own generic brand of insulin. It also exposes the sheer hypocrisy of Republicans who rail against inflation after they voted against allowing CMS to reduce costs to consumers by negotiating prescription drug prices.

Last month, a similar suit challenging the IRA, filed by the industry lobbying group PhRMA, was tossed by a federal judge in Texas for lack of standing.

Other "Big Pharma companies including Johnson & Johnson, Bristol Myers Squibb, Novo Nordisk and Merck have filed lawsuits challenging the IRA," according to Fierce Pharma. In New Jersey, they report, the companies have "banded together to present arguments at a joint hearing" this week.

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Ernest A. Canning is a retired attorney, author, and Vietnam Veteran (4th Infantry, Central Highlands 1968). He previously served as a Senior Advisor to Veterans For Bernie. Canning has been a member of the California state bar since 1977. In addition to a juris doctor, he has received both undergraduate and graduate degrees in political science. Follow him on twitter: @cann4ing

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