A federal appellate court has handed down the first appellate-level decision addressing the merits of drug manufacturers’ challenges to the Inflation Reduction Act of 2022's (IRA) Medicare Drug Negotiation Program (Negotiation Program). On Thursday, May 8, 2025, a three-judge panel of the Third Circuit affirmed the district court’s rejection of AstraZeneca’s constitutional and regulatory challenge to the Negotiation Program. The Third Circuit’s decision is significant because that court has appellate jurisdiction over five of the nine cases challenging the Negotiation Program. The three-judge panel in AstraZeneca has also been assigned to each of the four remaining cases in that circuit. Although AstraZeneca’s case was the narrowest of the five Third Circuit cases, the court’s opinion could shed light on what is to come in the remaining cases.

Constitutional Violation

The Third Circuit rejected AstraZeneca’s sole constitutional claim arguing that the Negotiation Program violates AstraZeneca’s procedural-due-process rights under the Fifth Amendment. AstraZeneca had argued that the Negotiation Program unconstitutionally deprived AstraZeneca of its property right to sell its drugs at a market rate. The Third Circuit, in line with the district courts that have addressed the issue, disagreed, holding that AstraZeneca has no property right to sell its products nor demand government reimbursement at specific prices. The court also dismissed AstraZeneca’s argument that the Negotiation Program does not allow sufficient judicial review of the government’s price-setting decisions. The court was unpersuaded by AstraZeneca’s analogy to a Supreme Court case analyzing the scope of judicial review for a World War II-era rent-control law. The fact that Part D plans, which are private parties, are the recipients of the drugs, the Third Circuit said, does not mean that the government is setting prices for private-market transactions here. 

APA Violations

The court of appeals also dismissed AstraZeneca’s Administrative Procedures Act (APA) challenges to CMS’s Negotiation Program Guidance. AstraZeneca argued that CMS guidance outlining the bona fide marketing standard and choosing to aggregate different products approved under different NDAs and BLAs is unlawful. The Third Circuit agreed with the district court that it lacked jurisdiction over AstraZeneca’s claims because AstraZeneca had not adequately shown that it has or will imminently suffer a cognizable Article III injury in fact as a result of CMS’s guidance. Unlike Novo Nordisk, who had multiple products grouped together for negotiation based on the same active moiety, AstraZeneca faced only an alleged risk that its products would similar be grouped together. Further, the Third Circuit said that AstraZeneca failed to submit concrete evidence that CMS’s guidance has or is currently causing AstraZeneca to change anything about how it is operating its company. The court therefore did not address the merits of the alleged APA violations. 

What Comes Next? 

Five other challenges are pending before appeals courts in the Third and Second Circuits. AstraZeneca was argued on the same day, and before the same three-judge panel, as Bristol Myers Squibb’s and Johnson & Johnson’s appeals. The same panel earlier this spring also heard appeals from Novo Nordisk’s and Novartis’s challenges, which were also both rejected by the district courts on similar grounds to those in AstraZeneca. The opinions in those cases may follow shortly. Once those rulings are issued, the Third Circuit will have weighed in on nearly all the arguments manufacturers have lobbed at the Negotiation Program. The Second Circuit heard arguments in Boehringer Ingelheim’s challenge in April and will likely issue a ruling the coming months. 

Meanwhile, we expect that AstraZeneca will seek the Supreme Court’s review. Even if the high court agrees to take up the case, it will likely not hear arguments and issue a decision until late in 2025 or even in 2026 because it will soon enter its summer recess. That timing may also allow the justices to consolidate AstraZeneca with the remaining cases, offering them the opportunity to address all the various challenges at once. Because the Supreme Court has discretion to review only parts of a case, we may also see the manufacturers begin to whittle down their claims to home in on only those arguments that manufacturers believe are most likely to persuade the justices.