US Supreme Court rebuffs pharma challenge to Biden-era drug price

• The law requires drugmakers to negotiate maximum prices with Medicare or face steep daily excise taxes and withdrawal from Medicare programs, affecting medications with high expenditures for Americans 65 and older
• Drugmakers claimed the plan violates Fifth Amendment due process and takings protections, as well as First Amendment free speech rights by compelling them to endorse government pricing views
• Lower appeals courts in Philadelphia and Manhattan sided with the government in all six cases, and the first negotiated prices on 10 drugs took effect in 2026

US Supreme Court Upholds Medicare Drug Price Negotiation Program

The U.S. Supreme Court on Monday declined to hear challenges from major pharmaceutical companies against Medicare's drug price negotiation program, leaving intact a key provision of Biden's 2022 Inflation Reduction Act. The decision allows the government to continue implementing negotiated price controls on high-cost medications.

Key Companies Affected:

Six major drugmakers had their appeals rejected: Novo Nordisk, AstraZeneca, Janssen Pharmaceuticals, Bristol Myers Squibb, Novartis, and Boehringer Ingelheim. The companies sued after their medications were targeted for price negotiations.

Legal Arguments:

The pharmaceutical companies argued the program constitutes government-dictated price controls rather than genuine negotiations. They claimed violations of Fifth Amendment due process and property rights, First Amendment free speech protections, and improper delegation of legislative authority to an executive agency. Lower courts—the 3rd and 2nd U.S. Circuit Courts of Appeals—sided with the government in all cases.

Program Details:

The law requires drugmakers to negotiate maximum prices directly with the Centers for Medicare & Medicaid Services (CMS) or face steep daily excise taxes and potential withdrawal of all products from Medicare programs. The first negotiated prices covering 10 drugs took effect this year.

Market Implications:

Despite originating under the Biden administration, the Trump administration continues defending the program. CMS Administrator Mehmet Oz emphasized the initiative targets Medicare's most expensive drugs. The plan aims to reduce costs for Medicare beneficiaries through lower out-of-pocket payments and premiums, addressing the fact that Americans pay more for pharmaceuticals than any other nation. The industry has expressed concerns about potential impacts on drug innovation and profitability.