AZ takes Medicare negotiation appeal to SCOTUS

AstraZeneca has elevated its challenge to Medicare drug price negotiation powers to the Supreme Court of the US (SCOTUS), despite earlier defeats at the district and appeals court levels.

The newly filed petition claims that Medicare's drug price negotiation programme is unconstitutional and violates administrative procedures because it does away with due process by letting the Centers for Medicare & Medicaid Services (CMS) dictate maximum prices, without meaningful input or judicial review, and forces companies to accept federally-set prices or face severe financial penalties.

Under the Inflation Reduction Act of 2022, the Department of Health and Human Services (HHS), which oversees Medicare, can negotiate the "maximum fair prices" of selected drugs that have a "high budget impact" and are provided via Medicare Parts B and D.

AZ was one of the drugmakers targeted by the first round of medicines selected for mandatory price reduction under the IRA, which are due to see their prices cut from January 2026.

The list of 10 medicines includes Farxiga (dapagliflozin), AZ's big-selling diabetes, heart failure, and chronic kidney disease drug, which contributed around $4 billion of the company's total product sales of $26.7 billion in the first six months of this year.

AZ's petition asserts there is "no way for a manufacturer who objects to the selection of its drug, or to the price set for the drug by the agency, to ensure that its objections are taken into account."

It contends that the decisions laid down "are not subject to notice-and-comment rulemaking on the front end; nor are they judicially reviewable on the back end," and there is no recourse for companies to take other than withdraw all drugs from Medicare and Medicaid or face an 'excise tax', which can reach 19 times the manufacturer's total US revenues for the drug.

AZ further claims that the price set for Farxiga will "affect billions of dollars' worth of sales in private-party transactions," and notes that "with the IRA's price-controls set to take effect on January 1, review is warranted now."

AZ was an early mover in its litigation against the programme, so it is further down the legal path than some other drugmakers, but points out that some 10 lawsuits are still pending in lower courts.

In May, AZ's case was thrown out by the US Court of Appeals for the Third Circuit, which backed up a district court ruling that AZ had not identified anything protected by constitutional rights that would be jeopardised by the price negotiations.