The Supreme Court quietly shut down Big Pharma’s latest attempt to claw back Medicare’s authority to negotiate drug prices, declining to hear six drugmakers’ cases and leaving the Inflation Reduction Act program standing, according to Democrats and legal experts. The court gave no reason for rejecting the petitions, a familiar little act of institutional silence that leaves the machinery of power intact while the industry keeps looking for another opening.
Who Has the Power
Andrew Twinamatsiko, director of the Center for Health Policy and the Law at Georgetown Law’s O’Neill Institute, said the Supreme Court “was the last frontier for” the industry to challenge the foundation of the authority given to Medicare in the 2022 Inflation Reduction Act. He added, “This is a strong signal from the Supreme Court that constitutional arguments are not going to cut it” on the topic. That leaves the drugmakers’ legal assault with fewer places to hide, at least for now, after years of trying to use the courts to preserve their pricing power.
To date, the Centers for Medicare and Medicaid Services has completed two negotiation cycles spanning 25 drugs, saving seniors and the government billions of dollars. Those savings came through a process designed inside the state apparatus, with the people who actually pay the bills at the bottom while the companies that set the prices at the top fight to keep the racket running.
What People Actually Got
Democrats, who passed the law during the Biden administration, say they eventually plan to expand the list of drugs eligible for Medicare price negotiation. Senate Finance Committee ranking member Ron Wyden, D-Ore., said the Supreme Court’s move leaves the Inflation Reduction Act program “on solid ground.” He said Democrats are now going to look for “every opportunity to add to the negotiation list.” Wyden also said, “A broken clock can be right a couple of times,” and added, “I believe this law is going to stand up, and that’s what has been reflected by the court’s decision.”
A former congressional staffer who helped write the Medicare drug negotiation law, granted anonymity to discuss the Supreme Court denial, said Democrats were careful to make drugmakers’ participation in the program voluntary, even if withdrawing from Medicare and Medicaid would carry substantial consequences for them. The former aide said, “There are several steps in the process that’s in the statute that allows manufacturers to exit the program.” The aide added, “The drug price negotiation is voluntary for them, and that’s what is giving the courts the ability to rule that the law is constitutional.”
The Industry Keeps Swinging
PhRMA spokesperson Sarah Ryan said, “Our lawsuit is ongoing, and we continue to believe the IRA, which establishes government price controls for medicines, is unconstitutional.” The article said those claims, ranging from free speech to due process infringements, were also raised in the cases the justices denied. Government lawyers pointed that out Monday in filings to lower courts considering two of the outstanding suits. So far, no court has ruled against the Department of Health and Human Services’ defense of the program under Biden or President Donald Trump.
While no Republican lawmakers voted to support the Inflation Reduction Act, the Trump administration has continued to implement Medicare drug price talks even as Trump has focused on pursuing his most-favored-nation drug pricing effort. Program proponents now expect drugmakers to focus future challenges on narrower issues, such as why Medicare chose a certain product or what counts as a drug eligible for inclusion. AbbVie, for example, claims the government illegally selected Botox for negotiations because it is derived from human plasma, a product type the law expressly shields from inclusion.
The White House is reviewing a proposed rule from CMS to formalize its program standards beginning with prices that will go into effect in 2029. Drugmakers could challenge the eventual final rule. Negotiation supporters say the program’s future is solid with most constitutional challenges in the rear view mirror. CMS estimated that the initial round of Medicare price talks on the first set of 10 drugs would have saved roughly $6 billion in 2026 had the prices been applied in 2023. The Trump administration estimated last year that the second round, which impacted 15 medicines, would save $12 billion in 2027 were the prices applied in 2024. Earlier this year, the administration announced the third set of 15 new medicines selected for negotiations, a process that will conclude by Nov. 1. Some of the negotiated medicines will later be removed from the program once they face competition from generic or biosimilar products.
What Comes Next
New Jersey Rep. Frank Pallone, the top House Energy and Commerce Committee Democrat, said in a statement, “Now it’s time to build on the program by negotiating the prices on more drugs sooner and lowering prices for all Americans.” Larry Levitt, executive vice president for health policy at the research group KFF, said industry would “no doubt” fight any effort in Congress to apply the program to more drugs at a quicker cadence. He said Medicare can choose up to 20 drugs for negotiations annually beginning in 2029. Levitt added, “What I think would raise potentially bigger legal and political fights is trying to extend drug price negotiation to the commercial market.” He said, “That would just be a whole different kettle of fish.”
Nicholas Bagley, an administrative and health law expert at the University of Michigan Law School, said the Supreme Court had no reason to intervene because the lower courts were aligned in upholding the program’s constitutional legitimacy. Bagley said, “The abstract claim that this is somehow very consequential for the drug industry — that by itself isn’t going to be enough.” He added that what may have moved the needle for the court would have been if the Trump administration had not taken over the program’s defense from the Biden-era Justice Department and instead asked the justices to weigh in. “But,” he said, “it didn’t.”