Judge denies AstraZeneca’s lawsuit against Medicare negotiation

A judge on Friday granted the federal government’s request for summary judgment against AstraZeneca in its lawsuit challenging Medicare negotiation, finding that the drugmaker lacked standing to sue over the program.

In his opinion, U.S. District Judge Colm Connolly found that AstraZeneca had failed to properly establish its standing in filing a lawsuit against the federal government to block Medicare drug price negotiations.

AstraZeneca filed a motion for summary judgment in September asking that the judge find the federal government’s definitions of a “qualifying single source drug” and “bona fide marketing” under the Inflation Reduction Act to be contrary to the law.

Drugs chosen for negotiation could not have any generic competition, like AstraZeneca’s diabetes medication Farxiga, which was chosen as one of the first 10. If there was a generic form or biosimilar of a medication that was “bona fide” marketed, then the drug would technically not be eligible for negotiation.

The company sought to block the guidance set by the Centers for Medicare and Medicaid Services (CMS) regarding Medicare negotiation, arguing that it violated the Administrative Procedure Act. It also sought to have the negotiation program itself declared unconstitutional, violating the 5th Amendment.

Connolly made it clear in his ruling on Friday that AstraZeneca’s arguments did not convince him.

The federal judge found he lacked the jurisdiction to hear AstraZeneca’s first two claims regarding IRA’s definitions of a “qualifying single source drug” and “bona fide marketing.” He cited the drugmaker’s failure to establish that it had Article III standing to sue, meaning Connolly was not convinced that AstraZeneca was suffering or would soon suffer injury due to the CMS guidance.

The company argued it had standing because the CMS guidance would decrease its incentives to look for other uses of Farxiga in other health conditions.

“A loss or diminishment of an incentive to do something, however, is not a concrete injury,” Connolly wrote in his ruling.

“Were courts to adopt AstraZeneca’s ‘disincentivizing’ theory of standing, they would open their doors to plaintiffs whose only complaint was that they disliked a law or government action. If AstraZeneca had its way, the merits of every ‘sin tax’ could be challenged in never-ending lawsuits brought by disgruntled smokers, gamblers, oenophiles, and (at least in Philadelphia) soda drinkers,” wrote Connolly.

He also shot down AstraZeneca’s claim that the program violated the 5th Amendment — “nor shall private property be taken for public use, without just compensation” — by reiterating the government’s argument that no company is required to sell to Medicare.

“AstraZeneca’s ‘desire’ or even ‘expectation’ to sell its drugs to the Government at the higher prices it once enjoyed does not create a protected property interest,” the judge found. “And because AstraZeneca has no legitimate claim of entitlement to sell its drugs to the Government at any price other than what the Government is willing to pay, its due process claim fails as a matter of law.”

This is the second lawsuit challenging Medicare’s drug price negotiation program in which a federal judge has ruled in favor of the government. Earlier this month, a Texas federal judge dismissed a similar lawsuit brought forward by the Pharmaceutical Research and Manufacturers of America.

This decision by Connolly comes just one day before drugmakers are expected to send in their initial counteroffers to CMS on a maximum fair price for their drugs. CMS sent out its initial offers on Feb. 1.

Department of Health and Human Services Secretary Xavier Becerra praised the judge’s decision, calling it a “reason for optimism.”

“Today’s ruling offers more reason for optimism that we will drive down the cost of prescription drugs in America,” Becerra said in a statement to The Hill. “Yet another court has upheld the constitutionality of the President’s historic drug price negotiation law. We will continue to vigorously implement the law and defend it in court.”

AstraZeneca slammed the ruling in a statement issued shortly after the decision.

“We are disappointed with the court’s decision and the potential negative impact it will have on patients’ access to future life-saving medicines,” the company told The Hill. “We believe our challenge is necessary to support and improve patients’ access to future life-saving medicines, and our rights as a company. There is a lot at stake here, and we are actively evaluating our path forward.“