A federal judge in Delaware on Friday dismissed AstraZeneca's lawsuit challenging Medicare's new power to negotiate prices directly with drug manufacturers.

According to CNBC, the decision is another win for the Biden administration in a legal fight with the pharmaceutical industry over the constitutionality of those price negotiations.

Lawsuit of AstraZeneca Gets Dismissed

A key policy under the Inflation Reduction Act, the price talks aim to make some costly prescription drugs more affordable for seniors. However, AstraZeneca said in the lawsuit that the negotiations would force the company to sell medicines at massive discounts, below market rates, resulting in a decline in profits.

In rejecting that argument, US District Judge Colm Connolly wrote in a 47-page opinion that drug manufacturers were not "entitled to sell the government drugs at prices the government won't agree to pay," Reuters reported.

The judge further noted that AstraZeneca's participation was voluntary; thus, its "desire" or even "expectation" to sell its medicines to the government "at the higher prices it once enjoyed does not create a protected property interest."

Connolly added that the opportunity to sell drugs to millions of Medicare and Medicaid beneficiaries was a "powerful incentive" for drugmakers to participate in the price negotiations, but that "potential economic opportunity" was not "a gun to the head" and "AstraZeneca is free to accept or reject" it. 

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Critical Deadline

The judge's decision was delivered a day before a critical deadline. Makers of the first 10 drugs picked for negotiations have until Saturday to answer Medicare's initial price offer for their medicines.

AstraZeneca's Farxiga, used to treat Type 2 diabetes, chronic kidney disease, and heart failure, were among the drugs included. 

The ruling is just one development in an ongoing legal dispute between the government and pharmaceutical manufacturers over the constitutionality of this law that requires some drugmakers to negotiate prices with the US government's Medicare health insurance program.

AstraZeneca said it was disappointed in the ruling and is evaluating its path forward without saying whether it plans to appeal the decision. According to Reuters, the ruling marks the third time the administration's program has survived a legal challenge.

But many other cases are still pending, with Bristol Myers Squibb, Novartis, Novo Nordisk, and Johnson & Johnson presenting their oral arguments to a federal judge in New Jersey on March 7.

The final negotiated prices for the first round of medicines are expected to go into effect in 2026. 

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