/>iWhat’s Been Happening
As we wrote in May, the Third Circuit handed down the first appellate decision on the merits of manufacturers’ claims. In affirming the trial court and rejecting claims by AstraZeneca that the Negotiation Program violated its procedural due process rights, the court relied heavily on the fact that participation in Medicare is purely voluntary.
The government has continued to chalk up victories both on the merits and procedurally since May. This month, the Second Circuit joined the Third Circuit in concluding that manufacturers cannot claim any injury to their constitutional rights because participation in Medicare is voluntary. The ruling affirmed an earlier decision from a Connecticut federal judge dismissing Boehringer Ingelheim’s claims. Boehringer Ingelheim had brought claims alleging a violation of the Takings Clause and compelled speech in violation of the First Amendment, and that the Negotiation Program placed unconstitutional conditions on its participation in Medicare.
Additionally, a federal district judge in Texas rejected the merits of claims brought by the Pharmaceutical Research and Manufacturers of America (PhRMA) and two other trade associations. The case had previously been dismissed on procedural grounds but was reversed by the Fifth Circuit and sent back for a ruling on the merits. On remand, the district court granted the government another complete victory, aligning itself with the decisions from the Third Circuit and other district courts that have already rejected each of the manufacturers’ claims. Once again, the voluntariness of participation in Medicare was the touchstone of the court’s decision.
The Sixth Circuit also affirmed an Ohio federal district judge’s dismissal on procedural grounds of a claim brought by several chambers of commerce, purportedly on behalf of AbbVie. The chambers relied on their associational standing to sue on behalf of their members, but the district court found that the only chambers with the ability to sue in the chosen district lacked standing. The Sixth Circuit agreed, calling AbbVie a “stalking horse” behind the chambers and criticizing the decision to sue through the regional chambers of commerce as an attempt to “manipulate the system and manufacture standing to obtain a favorable venue.” The Sixth Circuit’s decision spells the likely end of the manufacturers’ attempt to obtain a favorable decision from the Sixth Circuit on the merits.
Finally, following Medicare’s release of negotiation-eligible drugs for 2025, Teva Pharmaceuticals, whose drugs AUSTEDO and AUSTEDO XR were listed for negotiation, sued in DC federal court. Teva’s suit is based on three theories, each of which has some similarities to those pressed by other manufacturers, including: (1) an Administrative Procedures Act violation relating to CMS’s definition of “qualifying single source drug,” (2) another APA violation relating to the “bona fide marketing” standard, and (3) a violation of Teva’s procedural due process rights. This is the second case brought in DC federal court; the first, brought by Merck, has been awaiting a decision on the parties’ cross-motions for summary judgment since November 2023.
What We’re Watching For
Although the government remains undefeated, manufacturers still have several cases offering a chance of victory. PhRMA’s loss in a Texas court tees up an appeal to the conservative-leaning Fifth Circuit, where one judge expressed some skepticism about the legality of the Negotiation Program overall during arguments on an appeal from a procedural dismissal of the case. Though a three-judge panel of the Third Circuit rejected AstraZeneca’s claims, the same panel is still working on its decision in four other manufacturers’ cases raising various claims and theories. Finally — and unsurprisingly — AstraZeneca has indicated it may ask the Supreme Court to review the Third Circuit’s decision rejecting its claims, with its petition due in September. If the justices decide to take up the case, they will likely issue a decision by June 2026.
