The Biden administration is defending the Medicare drug price negotiation program created by the Inflation Reduction Act, but the fight is playing out where many major federal programs are tested first: in the lower courts. Drugmakers and industry groups have filed multiple lawsuits in federal courts around the country, and the government is urging judges to reject those challenges and allow the program to continue on schedule.
If you have heard about Medicare gaining new leverage to negotiate over the cost of certain prescription drugs, this litigation is part of what will shape how quickly and how clearly that system settles into place. The big questions are constitutional and practical at the same time: how far can the federal government go in setting terms for participation in Medicare, and what counts as coercion when the government is also the customer.
Where the cases are now
As of March 28, 2024, the Supreme Court has not issued a merits ruling that resolves the legality of Medicare’s negotiation program. Most litigation activity is in federal district courts and the courts of appeals, where judges are addressing threshold issues like standing and ripeness, alongside constitutional and administrative-law claims. (Supreme Court posture can change through certiorari petitions or emergency applications, so readers should confirm the latest status on the Court’s docket.)
That procedural posture matters because the Supreme Court generally steps in later, after appellate courts issue decisions that sharpen the issues and create a clearer record. That said, Supreme Court activity is not limited to merits cases. Parties can also seek review through certiorari petitions after appellate rulings, or file emergency applications (for example, requests to stay lower-court orders) on an accelerated timeline. Readers who want to verify posture in real time can check the Supreme Court docket search (linked in Sources) for terms such as “Inflation Reduction Act,” “Medicare negotiation,” or the named plaintiffs discussed below.
Several prominent challenges have been filed by major manufacturers and trade groups, including suits brought by Merck, Bristol Myers Squibb, AstraZeneca, Johnson & Johnson (Janssen), Boehringer Ingelheim, and industry organizations such as PhRMA and the U.S. Chamber of Commerce.
Key cases at a glance
- Merck (D.N.J.): constitutional and administrative-law challenge; district-court proceedings ongoing as the program moves forward on its statutory schedule.
- Bristol Myers Squibb (D.N.J.): constitutional challenge similar to other manufacturers; district-court proceedings ongoing.
- AstraZeneca (D. Del.): district court ruled against the company on summary judgment (March 1, 2024); case moving into the appellate phase.
- PhRMA (W.D. Tex.): district court dismissed the suit (February 2024); case moving into the appellate phase.
Note: These entries reflect widely reported venues and outcomes as of the article date. For definitive posture (including notices of appeal, briefing schedules, and any stay requests), readers should confirm on the relevant district-court and appellate dockets (see PACER in Sources).
What the government is arguing
Across these cases, the government’s position has been consistent: the negotiation program is a lawful exercise of Congress’s power to structure federal spending, and participation in Medicare comes with conditions. In briefing, the administration has also emphasized practical, court-focused points about how and when judges should resolve challenges:
- Let the facts develop: Many arguments depend on how the program operates in practice, including what choices a manufacturer actually faces and what consequences apply.
- Posture matters: Courts often require a concrete dispute, not a dispute built largely around predictions of future harm.
- Use the right procedural vehicle: Even high-stakes disputes can turn on whether the plaintiff has standing, whether claims are ripe, and whether the record supports sweeping relief.
This is a common pattern in high-profile litigation. Before courts reach the headline constitutional questions, they often sort out whether the dispute is in the right procedural lane and whether the plaintiffs can show a present, redressable injury.
The program at the center
The legal fight stems from the Medicare drug price negotiation authority created by the Inflation Reduction Act of 2022. In broad strokes, Congress directed the Department of Health and Human Services, through CMS, to identify certain high-spending drugs and negotiate a “maximum fair price” (MFP). In practice, the MFP functions as the maximum price made available for Medicare-covered dispensing or administration under the statute’s defined Part D (and later Part B) pathways, rather than a single universal “ceiling price” across every context.
What “selected drugs” means: The law targets drugs with very high Medicare spending and no generic or biosimilar competition. It also uses time-on-market thresholds, generally focusing on drugs that have been on the market for years, rather than newly approved therapies. In plain terms, the program aims first at older, widely used brand-name drugs that generate large Medicare spending and still face no lower-priced competition. A practical shorthand is: high Medicare spend, no generic, and on the market long enough to meet the statute’s timing thresholds.
Timing: The first negotiated MFPs for the initial set of selected Medicare Part D drugs are scheduled to take effect in 2026. The program expands over time, including to certain Part B drugs beginning in 2028 under the statute’s phased-in schedule.
Supporters argue that Medicare, as one of the largest payers in the U.S. health system, should not be required to accept whatever prices are set in the broader market when taxpayers cover so much of the bill. Opponents, including many drug manufacturers, argue the structure is coercive and punishes companies that do not accept the government’s terms.
What drugmakers challenge
Across the lawsuits, manufacturers and trade groups raise constitutional and administrative-law objections. While details vary by case, the most common arguments include:
- Takings Clause concerns: Challengers argue the program effectively compels them to accept below-market payment terms for selected drugs, which they frame as an unconstitutional taking without just compensation.
- Due process and coercion arguments: Manufacturers argue the “negotiation” is not truly voluntary given the statute’s enforcement mechanisms. In particular, plaintiffs point to a steep excise tax as a statutory consequence tied to refusal to comply, and they argue the practical alternative is withdrawing the drug from Medicare and Medicaid markets, as plaintiffs describe the real-world choice.
- First Amendment objections: Some plaintiffs argue compelled-speech problems arise from program requirements they say force companies to frame the MFP as a product of “negotiation” or otherwise communicate messages in a way they contend is misleading. As with the other claims, the details depend on the specific complaint and the specific CMS requirements at issue.
- Separation of powers claims: Critics argue Congress gave the executive branch too much discretion in selecting drugs, setting the MFP framework, and enforcing the regime.
Those are serious claims, and they are being tested through the ordinary lower-court process. The outcomes will shape not only Medicare’s new pricing authority, but also how courts view similar conditions in other federal spending programs.
What plaintiffs want
In general, plaintiffs are asking courts for declaratory relief (a ruling that the negotiation provisions are unlawful) and injunctive relief (orders preventing CMS and HHS from enforcing key parts of the program, either nationwide or as applied to particular manufacturers).
That remedies question is where the 2026 timeline becomes concrete. A preliminary injunction, if granted and upheld on appeal, could delay negotiations, block enforcement tools, or pause implementation for particular companies or drugs. If injunction requests are denied, the program typically continues while the cases proceed, with manufacturers preserving their arguments for appeal.
Operationally, the difference between an as-applied injunction and a nationwide injunction can be decisive. An as-applied order could shield a particular company (or a specific selected drug) while the broader program moves forward for others. A nationwide order could halt key program steps across the board, at least temporarily, while the litigation continues.
For beneficiaries, the practical impact tracks the scope of any court order. A company-specific order would typically affect only the covered drugs tied to that manufacturer, while the rest of the selected-drug list could proceed. A nationwide order could delay or disrupt the negotiated pricing timeline more broadly.
Why timing matters
Even without a Supreme Court merits decision today, timing remains central. Many disputes rise or fall not on the ultimate constitutional theory, but on whether a court believes it has a sufficiently concrete, present-day controversy to decide, and a developed enough record to justify broad relief.
Three concepts in plain English
- Ripeness: Courts avoid deciding disputes that are still partly hypothetical. If the practical effects are still unfolding, judges may say, “Come back when we can evaluate the real-world impact.”
- Standing: The party suing must show a concrete injury that is traceable to the challenged action and likely to be fixed by a court ruling.
- Record development: Big constitutional questions often turn on details. What exactly did the agency require? What options did the company have? What consequences applied in practice?
Drugmakers are urging courts to resolve foundational constitutional questions about the negotiation regime now. The government’s consistent response is that the program is lawful, and that sweeping rulings should be grounded in a fuller factual record and a dispute that is ready for decision.
Timeline
- 2022: Congress enacts the Inflation Reduction Act, creating Medicare drug price negotiation authority.
- 2023 to 2024: CMS issues implementation guidance and selects the first set of drugs for negotiation.
- 2024 to 2025: Litigation continues across district courts and courts of appeals, including appeals following district-court rulings in some cases.
- 2026: First MFPs for the initial set of selected Part D drugs are scheduled to take effect.
- 2028: The program begins applying to selected Part B drugs under the statute’s phased-in schedule.
What happens next
In the near term, the most important developments will likely be appellate decisions, especially rulings that resolve standing and ripeness questions and define how courts assess the program’s enforcement mechanisms. If courts of appeals reach different conclusions on key constitutional issues, the odds of Supreme Court review rise. If appellate courts largely agree, the Supreme Court may still be asked to intervene, but it often waits for a cleaner conflict or a more mature record.
For the public, the practical point is straightforward: the Medicare negotiation program continues on its statutory timeline unless a court blocks it in a way that survives appeal.
Why it matters
Even if you are not on Medicare, this dispute is a window into a larger constitutional tension: when the federal government spends vast sums to run programs like Medicare, how much power does it have to set the terms?
That question shows up across American life, from healthcare reimbursement to education funding to highway grants. The Medicare negotiation program is one of the clearest and most consequential versions because it touches both household budgets and a massive national market.
Sources
-
Inflation Reduction Act of 2022 (Public Law 117-169): Medicare negotiation provisions and the “maximum fair price” framework.
URL: https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf -
CMS Medicare Drug Price Negotiation Program: Program overview, guidance, selected drugs, and key dates.
URL: https://www.cms.gov/medicare/drug-coverage/prescription-drug-coverage-inflation-reduction-act/medicare-drug-price-negotiation-program -
PACER: For district-court and court of appeals dockets tied to Medicare negotiation litigation, including cases filed by manufacturers and trade groups.
URL: https://pacer.uscourts.gov/ -
Supreme Court docket search: To verify whether any certiorari petition or emergency application is pending and to retrieve definitive PDF links if and when a case reaches the Court.
URL: https://www.supremecourt.gov/docket/docket.aspx -
DOJ Office of the Solicitor General, briefs: Federal government filings in relevant Medicare negotiation cases (cross-check against court dockets for definitive PDFs).
URL: https://www.justice.gov/osg/briefs