Can Pharma Companies Reverse String of Judicial Defeats at SCOTUS?

Following the passage of the Inflation Reduction Act’s (IRA) provision granting Medicare the authority to negotiate drug prices, pharmaceutical companies and allied organizations have brought a dozen lawsuits challenging the legality of the negotiation program. While this program annually saves billions of dollars for taxpayers through Medicare savings and for patients through reduced out-of-pocket costs, the program threatens pharmaceutical companies’ unilateral price-setting ability and will reduce their revenue by an estimated $100 billion over the next decade. 

With the political branches unwilling to repeal the IRA and only willing to make small changes to curtail Medicare negotiation, drug companies have turned to federal courts with the hope of a judicial ruling that the negotiation program is illegal. Although pharmaceutical companies and allied groups have pursued legal claims on a variety of constitutional and statutory grounds, none have succeeded on the merits thus far. However, the Supreme Court is currently considering a certiorari petition from the Third Circuit to determine several key challenges to the negotiation program’s legality. 

What is Medicare negotiation? 

Passed in 2022, the Inflation Reduction Act (IRA) required Medicare to negotiate “Maximum Fair Prices” for the most costly drugs each year, beginning in 2026. Previously, Medicare, as an entire program, was statutorily barred from negotiating drug prices. Through the new negotiation program, the HHS Secretary must negotiate with drug companies to determine the MFP for drugs with no generic or biosimilar competition. In the first round of negotiations, the Secretary negotiated 10 drugs’ prices for 2026; the number of drugs negotiated each year will increase, eventually reaching the maximum annual number of 20 drug prices for 2029. The Secretary chooses among the drugs qualifying for negotiation by selecting those with the highest expenditure for Medicare in the twelve months prior.

What Are the Pharma Companies’ Claims Against the Program’s Legality?

Companies have brought both constitutional and statutory claims. Many suits allege First Amendment violations by forcing the companies to “profess specific views that they do not hold as a condition of participation in the program.” Some suits allege Fifth Amendment violations, both that the program constitutes an illegal taking and violates the companies’ Due Process rights. Other suits allege Eighth Amendment violations, claiming that the program illegally administers excessive fines. Other suits focus on statutory violationsunder the Administrative Procedure Act, arguing that HHS’s actions in implementing the program and interpreting the IRA were arbitrary and capricious. Notably, AstraZeneca’s petition for writ of certiorari to the Supreme Court only focuses on its Due Process argument. 

How Have Their Lawsuits Gone So Far?

Despite pursuing claims on multiple grounds, pharmaceutical companies and industry groups have failed on the meritsin 10 district court decisions and six circuit court decisions. 

Interestingly, the Trump DOJ has been fervently defending the Medicare negotiation in court at all levels, despite the program receiving unanimous Republican opposition in its passage.

Even though they pursued different legal claims and in different courts, all cases have reached the same result: a resounding defeat for pharma companies. Following its loss both in the District of Delaware and in the Third Circuit, AstraZeneca appealed to the Supreme Court in September 2025. Briefing for the petition for certiorari just completed, and the Court will likely rule soon on whether to take this case, which could render the first major government negotiation of drug prices unconstitutional.

What Are the Stakes for Real People? 

Just with the first two sets of negotiated prices announced by HHS Secretary Becerra in 2024 and Secretary Kennedy in 2025, all drugs all saw large reductions in their prices, ranging from 38–84 percent of the pre-negotiation list price. Such price decreases, if they had been in effect the year prior, would have saved Medicare billions in net costs. Patients themselves also would have seen savings of an estimated $1.5 billion from the first set of negotiations and $685 million from the second set. At a time when many in the United States struggle to afford prescriptions, these savings can be the difference between a patient affording life-changing or life-saving medications and rationing or going without. In fact, analyses have shown increased Medicare access to negotiated drugs. If the Supreme Court grants certiorari for this case, for millions of Americans, the decision could literally be life or death, making the Court’s cert decision one to watch in the coming weeks.