The Biden administration achieved another significant victory on Friday in its efforts to protect a government drug price-setting program. This came after a federal judge dismissed both administrative and constitutional claims brought by AstraZeneca.
Chief Judge Colm F. Connolly of the US District Court for the District of Delaware ruled that AstraZeneca PLC lacked standing under Article III to challenge the legality of the government’s program. Additionally, the judge stated that AstraZeneca did not have a protected property interest under the Constitution that was at risk due to the program.
In August 2023, AstraZeneca challenged the Medicare Drug Price Negotiation Program introduced by the 2022 Inflation Reduction Act, which empowers the government to set prices for certain high-cost prescription drugs covered by Medicare. One of the drugs impacted was Farxiga, used in the treatment of Type 2 diabetes, which was included in the first round of negotiations under the program last year.
Judge Connolly, appointed by former President Donald Trump, denied AstraZeneca’s motion for summary judgment and sided with the government’s motion for summary judgment.
The judge emphasized that since AstraZeneca’s participation in Medicare was voluntary, the company did not have a protected property interest in selling drugs to the government at non-negotiable prices. As a result, AstraZeneca’s due process claim was deemed legally insufficient.
Judge Connolly’s opinion highlighted the voluntary nature of participating in the Medicare program, citing legal precedents such as Dayton Area Chamber Commerce v. Becerra to support his decision.
The court dismissed AstraZeneca’s claims under Article III regarding the manufacturers’ Administrative Procedures Acts claims, citing legal inaccuracies and a lack of concrete harm to support the claims.
Following the ruling, a spokesperson for AstraZeneca mentioned that the company is evaluating its next steps.
AstraZeneca’s Argument
According to Andrew Twinamatsiko, a director at Georgetown University’s O’Neill Institute, the challenges against the Inflation Reduction Act lacked substance from the beginning. He suggested that AstraZeneca’s due process claim failed to demonstrate a deprivation of entitlement by the government.
AstraZeneca’s claims against the Centers for Medicare & Medicaid Services accused the agency of violating the Administrative Procedure Act by broadening the definition of certain drugs, impacting their eligibility and pricing under the program.
The pharmaceutical company also contended that the program violated due process under the Fifth Amendment.
AstraZeneca sought the court to grant its motion for summary judgment, revise certain program guidance, and declare the price-setting provision unconstitutional.
The US Department of Justice, representing the CMS, urged the court to dismiss the Administrative Procedure Act claims and rule in its favor on due process grounds.
Patients for Affordable Drugs applauded the ruling, emphasizing the need to prioritize patient well-being over pharmaceutical industry interests.
Judge Connolly allowed Patients for Affordable Drugs and other advocacy groups to file an amicus brief just prior to his decision.
Another Pharma Loss
The outcome for AstraZeneca reflects a broader trend of setbacks for the pharmaceutical industry in legal challenges against the program. Similar cases involving other manufacturers and industry groups are pending in different jurisdictions.
The case is AstraZeneca Pharm. LP v. Becerra, D. Del., No. 1:23-cv-00931, memorandum opinion 3/1/24.