Federal judge denies request to block Medicare negotiation

A federal judge on Friday declined to block the Medicare Drug Price Negotiation program, meaning companies will have to play ball with the government for the time being.

U.S. District Judge Michael J. Newman ruled against a request for a preliminary injunction on the program that was requested by the Chamber of Commerce in its lawsuit to stop negotiations.

His ruling comes right before the Oct. 1 deadline by which drugmakers whose products were named for negotiation are required to sign agreements to engage in the process or face the penalties.

Along with denying the Chamber’s request for an injunction, Newman also denied a request from the federal government to dismiss the case entirely. The government is arguing the Chamber has no standing to sue over Medicare negotiation since it’s not a pharmaceutical company itself.

Newman issued no opinion on whether the trade group had standing and said he “will entertain the filing of one or more renewed motion(s) to dismiss.” The Chamber has maintained that it can sue on behalf of its members.

The judge noted that while case law regarding associational standing is “scarce,” individual participation from a member of an organization is ” not normally necessary” when a group is seeking relief on behalf of said member.

Many of the companies — Merck, Bristol Myers Squibb and AstraZeneca — have said they plan to sign the agreements, albeit with protest.

Oral arguments over the injunction were heard two weeks ago in the Southern District Court of Ohio.

The legal threshold for obtaining a preliminary injunction involves demonstrating the party which requested it is likely to succeed in the case based on the merits, that the party will suffer irreparable harm without an injunction, the opposing party will not suffer harm as a result and that issuing an injunction is in the interest of the public.

During the oral arguments, the Chamber asserted it would win in the case because the program is not truly a negotiation, but a scheme passed by Congress to “blur lines of accountability.”

In its request, the Chamber said “irreparable harm” would occur and has already been experienced by some of its members. The government pushed back on these assertions, noting that the negotiated prices are years away from going into effect.

The Chamber alleged a host of constitutional violations within the Medicare negotiation program in its lawsuit and they argued that blocking any constitutionally unsound program is in the public’s interest.

Based on his decision, it appears Newman was unconvinced by the Chamber’s argument.

“They have demonstrated neither a strong likelihood of success nor irreparable harm. Consequently, their request for immediate preliminary injunctive relief—to stop implementation of the Program on or before October 1, 2023—is denied,” Newman stated in his ruling.

Another key aspect of the government’s argument against the lawsuits to stop Medicare negotiation is that the program is voluntary at the end of the day, meaning no companies are compelled to take part in it if they disagree with how it’s operated. Newman appeared to agree with this argument in his ruling on Friday.

Noting a prior ruling, Newman found that “participation in Medicare, no matter how vital it may be to a business model, is a completely voluntary choice.”

The lower, negotiated prices are set to go into effect at the start of 2026 if everything goes to plan. The government had argued that all the lawsuits suing to stop Medicare negotiation will likely have been decided by that point, making the supposedly urgent need for an injunction moot.

During the oral arguments, the government emphasized the fact that the Chamber itself is not a pharmaceutical company and would not suffer harm as a result of the negotiation program, even as it is suing on behalf of one of its members.

With the preliminary injunction denied, the negotiation process is now free to proceed as scheduled, with talks set to take place during 2023 and 2024.

This story was updated at 6:27 p.m.