A recent decision by a federal appeals court has upheld Medicare’s drug price negotiation program, allowing the government to group together products with the same active ingredient for negotiation purposes. This ruling comes as a blow to Novo Nordisk, a pharmaceutical company that challenged the program in court.
The pharmaceutical industry has faced multiple defeats in court over the issue of Medicare drug price negotiations. Judges have ruled against drug companies in at least 15 cases since the law governing negotiations went into effect in 2023. Patients for Affordable Drugs, an advocacy group, has supported Medicare’s ability to negotiate lower drug prices.
Novo Nordisk’s lawsuit specifically targeted the way Medicare selects drugs for negotiation. The government is permitted to choose a set number of drugs each year for negotiation, starting with 10 in the first year and increasing to 20 by the fourth year. Novo objected to the government’s decision to count six of its insulin products as one for negotiation purposes, arguing that each product should be negotiated separately.
The U.S. Court of Appeals for the Third Circuit ruled that the Inflation Reduction Act, which established the negotiation program, does not allow for judicial review of Medicare’s drug selection process. This decision empowers Medicare to negotiate prices for a broader range of drugs than would have been possible otherwise.
The court’s ruling is significant as it not only affects Novo Nordisk’s insulin products but also extends to other medications with the same active ingredient. For example, three of Novo’s popular diabetes and weight loss drugs – Ozempic, Rybelsus, and Wegovy – were grouped together for negotiation due to their shared active ingredient, semaglutide.
This ruling may set a precedent for future policies related to drug price negotiations. The Trump administration is considering a policy that would allow products with added ingredients that do not result in clinically meaningful differences to be eligible for negotiation. This could impact biologics that have been reformulated with hyaluronidase for easier administration.
Despite these potential changes, the Trump administration has delayed implementing the new policy for at least another year. As the debate over drug pricing continues, the court’s decision in favor of Medicare’s negotiation program signals a shift towards greater transparency and affordability in the pharmaceutical industry.
