A federal appeals court on Wednesday rejected a lawsuit by the pharmaceutical industry's main trade group, dealing another setback to efforts to dismantle the Medicare drug price negotiation program. The U.S. Court of Appeals for the Fifth Circuit upheld a prior summary judgment against the Pharmaceutical Research and Manufacturers of America (PhRMA), which had argued the program violates drugmakers' due process rights.
The ruling is the latest in a string of court decisions favoring the negotiation mechanism created under the Inflation Reduction Act. The court's reasoning centered on the voluntary nature of Medicare participation: manufacturers are not obligated to sell their products through the program if they object to the negotiated prices.
“We conclude that manufacturers lack a protected interest in selling to Medicare beneficiaries at a preferred price because participation in Medicare and Medicaid, and thus in the Program, is voluntary,” the panel wrote. The judges acknowledged the “financial importance” of Medicare as a buyer, but noted that financial pressure does not amount to forced participation.
U.S. District Judge David Alan Ezra had previously dismissed PhRMA's lawsuit, ruling that the plaintiffs “cannot demonstrate that the Program deprives them of a protected interest and therefore their Due Process Clause claim fails as a matter of law.” The Fifth Circuit's opinion affirms that reasoning.
This victory adds to the government's courtroom winning streak. Other challenges from the U.S. Chamber of Commerce and drugmakers such as Boehringer Ingelheim, AstraZeneca, and Merck have also failed. In May, the Supreme Court declined to hear a similar appeal, effectively upholding lower court decisions that rejected industry arguments. The legal landscape is now heavily stacked against the industry, though further appeals are possible.
Patient advocacy groups applauded the decision. Emma Sands, director of media and communications at Patients For Affordable Drugs, said in a statement: “PhRMA has been at the center of the industry’s years-long, multi-million-dollar legal campaign to overturn Medicare negotiation. Now, they’ve lost one of their most significant challenges to the program to date. The Fifth Circuit rejected this sweeping constitutional attack, delivering the 25th courtroom victory for Medicare negotiation and the patients who fought for it.”
Peter Maybarduk, access to medicines director at Public Citizen, added: “For years, drugmakers sought to sow doubt and find a sympathetic court, fighting something everyone wants, which is affordable medicine and a government that negotiates aggressively on Americans’ behalf. They failed.”
The Hill has reached out to PhRMA for comment. The ruling comes as the Biden administration continues to implement the negotiation program, with the first round of negotiated prices set to take effect in 2026. The program is expected to save billions for Medicare and reduce out-of-pocket costs for seniors, a key pillar of the administration's healthcare agenda. Meanwhile, other policy debates around healthcare costs continue to unfold in Washington.
The decision is a clear signal that courts are unlikely to overturn the program on procedural grounds, forcing the industry to shift its strategy. Some analysts expect drugmakers to focus on legislative efforts or to seek changes through future rulemaking, but for now, the legal path appears closed. The ruling also bolsters the administration's position as it prepares to negotiate prices for the next batch of drugs, potentially expanding the program's reach and impact.
