Federal Appeals Court Upholds Medicare Drug Price Negotiations for Novo Nordisk Insulin Products
Key Insights
The US Court of Appeals for the Third Circuit rejected Novo Nordisk's constitutional challenge to the Medicare Drug Price Negotiation Program, affirming the government's authority to negotiate prices for six of the company's insulin products.
The court ruled that the Centers for Medicare & Medicaid Services (search) correctly followed federal statute when grouping Novo's insulin products together for price negotiations under the Inflation Reduction Act.
This decision continues a pattern of failed pharmaceutical industry challenges to the Medicare negotiation program, with similar rulings against Johnson & Johnson, Bristol Myers Squibb (search), Novartis, and AstraZeneca.
A federal appeals court delivered a significant blow to Novo Nordisk on Monday, rejecting the Danish pharmaceutical company's constitutional challenge to the US government's Medicare Drug Price Negotiation Program and affirming the agency's selection of six insulin products for price negotiations.
The US Court of Appeals for the Third Circuit upheld a lower court's dismissal of Novo Nordisk's lawsuit, with Judge Thomas Hardiman writing that the Centers for Medicare & Medicaid Services (search) "correctly followed federal statute when it grouped together Novo's insulin products to be subject to federal price negotiations."
Constitutional Challenges Rejected
The unanimous three-judge panel rejected Novo Nordisk's claims that the program violated multiple constitutional provisions, including the First Amendment compelled speech doctrine, Fifth Amendment due process clause, separation of powers doctrine, and the Administrative Procedure Act. Novo had challenged CMS in 2023, alleging the agency unlawfully deemed six of its products as a single biologic product and subjected all of them to price controls.
Judge Hardiman emphasized that participation in the negotiation program remains voluntary, stating, "We have held that the Act provides an escape hatch for a company that declines to participate in the Program." The law offers "manufacturers a 30-day exit from the Coverage Gap Discount and Manufacturer Discount Programs upon request" to avoid facing an excise tax for failing to comply with the Medicare negotiations.
Industry-Wide Legal Defeats
This ruling continues a pattern of unsuccessful pharmaceutical industry challenges to the Medicare negotiation program. The Third Circuit has previously upheld similar dismissals in cases brought by Johnson & Johnson, Bristol Myers Squibb (search), Novartis, and AstraZeneca. In May, the court ruled that AstraZeneca had "no protected constitutional right to sell its drugs to the government at a price higher than what it wants to pay."
The court specifically noted that federal law bars judicial review of the drugs selected for the negotiation program, further limiting pharmaceutical companies' legal options to challenge the process.
Program Implementation and Timeline
The Medicare Drug Price Negotiation Program was established under President Joe Biden's Inflation Reduction Act and empowers the government to negotiate drug prices for medications covered under Medicare, which serves 66 million Americans. Despite the ongoing legal challenges, negotiations have proceeded as planned, with the initial round of negotiated drug prices set to take effect on January 1, 2026.
Company Response and Future Options
A Novo Nordisk spokesperson expressed disappointment with the decision, stating the company is "assessing our options to appeal this ruling." The spokesperson added that "Novo Nordisk remains opposed to government price setting through the Inflation Reduction Act and has significant concerns about the law and with how CMS implemented the statute."
The ruling was authored by Circuit Judge Thomas Hardiman, an appointee of Republican President George W. Bush, and joined by Circuit judges Peter Phipps, appointed by Trump, and Arianna Freeman, a Biden appointee. This bipartisan judicial consensus underscores the legal strength of the government's position in defending the negotiation program.