Solicitor General D. John Sauer is urging the Supreme Court to deny AstraZeneca’s petition to hear the constitutionality of the case.
Solicitor General D. John Sauer has filed a brief with the Supreme Court urging for the denial of AstraZeneca’s petition to hear the drugmaker’s case challenging the constitutionality of the Medicare drug negotiation program.
AstraZeneca filed a petition in September for its case to be heard. It intends to file a reply to Sauer’s brief on or before Jan. 7 to ensure that the Supreme Court has a full briefing in advance of its Jan. 23 conference, according to court documents.
Other pharmaceutical companies have also sued to stop the Medicare drug price negotiation program. At a minimum, Sauer said, the court may wish to consider all pending and soon-to-be filed petitions regarding the constitutionality of the negotiation program together.
The question is whether, under the Fifth Amendment, a pharmaceutical manufacturer has a protected property interest in setting the prices it charges for drugs within the confines of a government-run healthcare program.
“The federal government regularly negotiates the prices it pays for goods, and drug manufacturers have no property interest in forcing the government to pay for prescription drugs on specific terms,” Sauer said in the brief.
Drugmakers have long been required to negotiate prices with the Departments of War and Veterans Affairs in another government program, Medicaid.
“Consequently, manufacturers often sell drugs to these agencies for roughly half as much as they charge Medicare Part D,” Sauer said in the brief.
The negotiation program in question applies only to Medicare, so drugmakers may opt out of price negotiations if they leave the Medicare market, both the district court and court of appeals have reasoned. “Although there are ‘powerful incentive[s]’ to participate in Medicare, ‘it does not follow’ that the government’s exercise of its market power ‘requires a drug manufacturer to participate’ in the Negotiation Program ‘or any other Medicare program,’” the brief said.
The petition should be denied, Sauer said. AstraZeneca’s assertion that it has a due process right to sell its drugs to Medicare beneficiaries at its preferred price lacks merit, he said.
WHY THIS MATTERS
On Jan. 1, the first round of negotiated drug prices took effect. Among the drugs targeted in the first round was Farxiga, a drug made by AstraZeneca.
CMS selected the 10 drugs in August 2023. The drugs accounted for $50 billion of gross Medicare Part D prescription drug costs between June 2022 and May 2023. Medicare beneficiaries paid $3.4 billion in out-of-pocket costs for these drugs in 2022.
Negotiated prices are projected to save 9 million people on Medicare $1.5 billion in out-of-pocket costs, while saving taxpayers $6 billion in 2026 alone, according to Patients For Affordable Drugs.
Drugs with the highest expenditures are part of the negotiation program. These are drugs that have no generic or biosimilar competitors and have been on the market for at least seven years.
The Inflation Reduction Act gave the Centers for Medicare & Medicaid Services the ability to negotiate drug prices.
THE LARGER TREND
Until 2006, Medicare did not cover the cost of prescription drugs unless they were administered by medical professionals under Part B. That changed in 2003, when Congress enacted Medicare Part D to provide “a voluntary prescription drug benefit program that subsidizes the cost of prescription drugs and prescription drug insurance premiums for Medicare enrollees.”
The prescription drug benefit went into effect in 2006. Even then, Congress initially barred CMS from negotiating Part D drug prices or otherwise becoming involved in the arrangements between drug manufacturers and insurance plans.
That changed under the Inflation Reduction Act in 2022.
AstraZeneca has argued that in setting prices in Medicare Part D, CMS is dictating the prices for “private transactions to which the government is not a party,” such as when Medicare beneficiaries obtain prescriptions from a pharmacy.
Medicare Part D spending is projected to increase faster than any other category of health spending, according to court documents.
ON THE RECORD
Merith Basey, CEO of Patients For Affordable Drugs, issued the following statement: “The Solicitor General’s brief sends a clear signal that this program is on solid legal footing. If the Supreme Court rejects Astrazeneca’s petition in line with decisions from the lower courts, millions of patients across the country will benefit from long-overdue lower prices on their life-saving drugs”
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