Federal Judge Rejects Attempt to Halt Medicare Negotiation – Key Updates

A federal judge has declined to block the Medicare Drug Price Negotiation program, requiring companies to cooperate with the government for now. This ruling comes ahead of the Oct. 1 deadline, by which drugmakers must sign agreements to engage in the negotiation process or face penalties.

U.S. District Judge Michael J. Newman rejected a request for a preliminary injunction on the program, which was filed by the Chamber of Commerce in its lawsuit to halt negotiations.

Furthermore, Newman dismissed the government’s request to dismiss the case entirely. The government argues that the Chamber has no standing to sue over Medicare negotiation as it is not a pharmaceutical company itself.

Newman did not provide an opinion on the issue of standing, but stated that he is open to hearing one or more renewed motions to dismiss. The Chamber claims it can sue on behalf of its members.

The judge noted that while case law on associational standing is limited, individual participation from a member of an organization is typically not required when a group seeks relief on behalf of its member.

Many companies, such as Merck, Bristol Myers Squibb, and AstraZeneca, have indicated that they intend to sign the agreements with protest.

The oral arguments on the injunction took place two weeks ago in the Southern District Court of Ohio.

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

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

The Chamber argued that “irreparable harm” has already been experienced by some of its members and would occur if the program continues. The government countered these claims, stating that the negotiated prices will not take effect for several years.

In its lawsuit, the Chamber alleged numerous constitutional violations within the Medicare negotiation program and argued that blocking an unsound program is in the public’s interest.

Based on his decision, it appears that Newman was not convinced by the Chamber’s argument.

“They have not demonstrated a strong likelihood of success or irreparable harm. Therefore, their request for immediate preliminary injunctive relief to stop implementation of the Program before October 1, 2023, is denied,” stated Newman in his ruling.

Another key point in the government’s argument against the lawsuits to stop Medicare negotiation is that participation in the program is voluntary, meaning companies can choose not to take part if they disagree with its operation. Newman seemed to support this argument in his ruling.

Citing a previous 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 scheduled to take effect at the start of 2026 if everything goes as planned. The government argued that all the lawsuits attempting to halt Medicare negotiation will likely have been resolved by that time, rendering the need for an injunction moot.

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

With the preliminary injunction denied, the negotiation process will proceed as scheduled, with talks scheduled for 2023 and 2024.

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

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