Big Pharma’s legal war against Medicare’s authority to haggle over drug prices ended last week at the Supreme Court — very quietly.
Six drugmakers failed to persuade the justices to even hear their case, despite expectations that the high court would ultimately weigh in on the constitutional basis of former President Joe Biden’s legacy health care victory.
The Supreme Court “was the last frontier for” the industry to challenge the foundation of the authority given to Medicare in the 2022 Inflation Reduction Act, said Andrew Twinamatsiko, director of the Center for Health Policy and the Law at Georgetown Law’s O’Neill Institute.
“This is a strong signal from the Supreme Court that constitutional arguments are not going to cut it” on the topic, he added.
To date, the Centers for Medicare and Medicaid Services has completed two negotiation cycles spanning 25 drugs, saving seniors and the government billions of dollars.
Democrats, who passed the law during the Biden administration, say they eventually plan to expand the list of drugs eligible for Medicare price negotiation.
Monday’s denial of the six petitions doesn’t wholly dispatch what Twinamatsiko called the industry’s “first generation of cases” targeting Medicare price negotiations. Merck and PhRMA, the lobbying group for brand-name manufacturers, await decisions in lower courts. Pending cases from manufacturers AbbVie and Teva raise novel arguments pertinent to their products’ selection for the program, in addition to constitutional claims.
“Our lawsuit is ongoing, and we continue to believe the IRA, which establishes government price controls for medicines, is unconstitutional,” said PhRMA spokesperson Sarah Ryan.
But those claims, ranging from free speech to due process infringements, were also raised in the cases the justices denied — a point government lawyers were quick to point out Monday in filings to lower courts considering two of the outstanding suits. So far, no court has ruled against the Department of Health and Human Services’ defense of the program under Biden or President Donald Trump.
While no Republican lawmakers voted to support the Inflation Reduction Act, the Trump administration has continued to implement Medicare drug price talks even as Trump has focused on pursuing his most-favored-nation drug pricing effort.
The Supreme Court didn’t give its reasoning for rejecting the cases.
Senate Finance Committee ranking member Ron Wyden (D-Ore.) said the Supreme Court’s move leaves the Inflation Reduction Act program “on solid ground.” Democrats, he said, are now going to look for “every opportunity to add to the negotiation list.”
“A broken clock can be right a couple of times,” Wyden said of the decision to not consider the lawsuits. “I believe this law is going to stand up, and that’s what has been reflected by the court’s decision.”
A former congressional staffer who helped write the Medicare drug negotiation law, granted anonymity to discuss the Supreme Court denial, said Democrats were careful to make drugmakers’ participation in the program voluntary — even if withdrawing from Medicare and Medicaid would carry substantial consequences for them.
“There are several steps in the process that’s in the statute that allows manufacturers to exit the program,” the former aide said. “The drug price negotiation is voluntary for them, and that's what is giving the courts the ability to rule that the law is constitutional.”
Program proponents now expect drugmakers to focus any future challenges on narrower issues, such as why Medicare chose a certain product or what counts as a drug that’s eligible for inclusion. AbbVie, for example, claims that the government illegally selected Botox for negotiations because it’s derived from human plasma — a product type that the company says the law expressly shields from inclusion.
The White House is reviewing a proposed rule from CMS to formalize its program standards beginning with prices that will go into effect in 2029. Drugmakers could challenge the eventual final rule.
But negotiation supporters agree that the program’s future is solid with most of its constitutional challenges in the rear view mirror.
While a specific number is difficult to determine, CMS estimated that the initial round of Medicare price talks on the first set of 10 drugs would have saved roughly $6 billion in 2026 had the prices been applied in 2023. The Trump administration estimated last year the second round, which impacted 15 medicines, would save $12 billion in 2027 were the prices applied in 2024. Earlier this year, the administration announced the third set of 15 new medicines selected for negotiations, a process that will conclude by Nov. 1.
Some of the negotiated medicines will later be removed from the program once they face competition from generic or biosimilar products.
“Now it’s time to build on the program by negotiating the prices on more drugs sooner and lowering prices for all Americans,” New Jersey Rep. Frank Pallone, the top House Energy and Commerce Committee Democrat, said in a statement.
Larry Levitt, executive vice president for health policy at the research group KFF, said industry would “no doubt” fight any effort in Congress to apply the program to more drugs at a quicker cadence. Medicare can choose up to 20 drugs for negotiations annually beginning in 2029.
“What I think would raise potentially bigger legal and political fights is trying to extend drug price negotiation to the commercial market,” he said. “That would just be a whole different kettle of fish.”
But with the lower courts aligned in upholding the program’s constitutional legitimacy, the Supreme Court had no reason to intervene, said Nicholas Bagley, an administrative and health law expert at the University of Michigan Law School.
“The abstract claim that this is somehow very consequential for the drug industry — that by itself isn’t going to be enough,” he said.
What may have moved the needle for the court, Bagley added, is if the Trump administration hadn’t taken over the program’s defense from the Biden-era Justice Department and instead asked the justices to weigh in.
“But,” he said, “it didn’t.”
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