AstraZeneca has lost its lawsuit challenging Medicare’s drug price negotiation program after a federal judge concluded the pharmaceutical giant has no standing to contest the law that created it, nor does the company have a constitutionally protected property interest in the matter.
The decision issued Friday is the first of several lawsuits filed by pharmaceutical companies in opposition to certain provisions of the law, the Inflation Reduction Act (IRA). Many of them make constitutional claims similar to those argued by AstraZeneca.
Farxiga, a blockbuster AstraZeneca medicine with approvals in type 2 diabetes, heart failure, and chronic kidney disease, is one of the first 10 drugs selected by CMS for negotiation. These drugs, which have no generic competition, represented more than $50 billion in Medicare Part D costs between June 1, 2022, and May 31, 2023.
AstraZeneca claimed that CMS’s guidance placing Farxiga on the list of drugs is a violation of the federal Administrative Procedure Act. The company argued that this placement causes it harm by eliminating incentives for developing innovative new uses for the drug, which in turn will narrow patient access to new treatments. AstraZeneca also claimed the IRA is unconstitutional.
Colm Connolly, chief judge for the U.S. District Court for the District of Delaware, questioned AstraZeneca’s position that it would be harmed. In the 45-page opinion, Connolly wrote that the loss or diminishment of an incentive to do something is not a concrete injury. The harm AstraZeneca claims is hypothetical and could happen if the company were to develop new formulations of new uses of Farxiga’s active pharmaceutical ingredient—but only if these new uses received FDA approval, and then only if the drug were selected for price negotiation.
“The fact that the word ‘if’ is required to describe AstraZeneca’s alleged injury demonstrates that the harm it complains of is neither actual nor certainly impending,” Connolly said.
Furthermore, Connolly disagreed with AstraZeneca’s claim that the law violates its rights under the Fifth Amendment, which states that no one shall be “deprived of life, liberty, or property without due process of law.” Connolly said the expectation or desire to sell drugs at the higher prices a company once enjoyed does not create a protected property interest. No one is entitled to sell to the government at prices the government won’t pay, he said.
“And because AstraZeneca has no legitimate claim of entitlement to sell its drugs to the government at any price other than what the Government is willing to pay, its due process claim fails as a matter of law,” Connolly wrote.
In a statement sent to media outlets in response to the ruling, AstraZeneca said it is still assessing its options.
“We are disappointed with the court’s decision and the potential negative impact it will have on patients’ access to future life-saving medicines,” the company said. “We believe our challenge is necessary to support and improve patients’ access to future life-saving medicines, and our rights as a company. There is a lot at stake here, and we are actively evaluating our path forward.”
The case, filed in the U.S District Court for the District of Delaware, is AstraZeneca LP and AstraZeneca AB v. Xavier Becerra in his official capacity as secretary of Health and Human Services, and Chiquita Brooks-Lasure, in her official capacity as administrator of the Centers for Medicare and Medicaid Services. The case is number 1:23-cv-931-CFC.
AstraZeneca’s lawsuit is one of eight filed by pharmaceutical companies that are challenging the IRA. Two suits from industry groups have also been filed. One of them was dismissed last month by a judge in the U.S. District Court for the Western District of Texas. The National Infusion Center—the only one of the three plaintiffs residing in Texas—was dismissed from the suit. Consequently, the case was dismissed due to improper venue.
