Administrative Procedure Act (APA) Challenges to the Medicare Drug Price Negotiation Program

Administrative Procedure Act (APA)

Challenges to the Medicare Drug Price

Negotiation Program

November 14, 2024

Congressional Research Service

https://crsreports.congress.gov

R48264

SUMMARY

Administrative Procedure Act (APA) Challenges

to the Medicare Drug Price Negotiation

Program

R48264

November 14, 2024

Hannah-Alise Rogers

Legislative Attorney

Congress created the Medicare Drug Price Negotiation Program (the Program) through the

budget reconciliation measure known as the Inflation Reduction Act (IRA; P.L. 117-169), which

became law on August 16, 2022. The Program allows Medicare to negotiate the prices of certain

Medicare drugs directly with drug manufacturers for the first time. The Centers for Medicare and Medicaid Services (CMS),

the division of the U.S. Department of Health and Human Services (HHS) tasked with administering the Program, has issued

several guidance documents explaining the Program’s initial implementation. On August 29, 2023, CMS selected the first 10

Medicare Part D drugs that will be subjected to negotiated prices beginning in 2026. The agency announced the negotiated

prices for those drugs on August 14, 2024.

In summer 2023, several drug manufacturers and trade associations representing manufacturers challenged the law before

federal district courts across the country. The plaintiffs made various arguments in different lawsuits, including that the law is

unconstitutional under the First, Fifth, and Eighth Amendments. They also alleged violations of the Nondelegation Doctrine

and the Spending Clause. In addition, a few manufacturers have challenged the guidance that CMS issued related to the

Program’s implementation under the Administrative Procedure Act (APA). Those lawsuits alleged that CMS exceeded its

authority under the statute in the way that it defined certain terms, including a qualifying single source drug (QSSD), and

other standards that the agency put in place, including the requirement that competitor generic drugs be subject to “bona fide”

marketing.

Of the 10 cases initially filed, one was voluntarily dismissed, and eight have been decided at the federal district court level.

So far, both the manufacturers’ APA challenges and constitutional challenges have been unsuccessful. Specifically for the

APA challenges, the district courts held that the drug manufacturers lacked Article III standing to bring the challenges, and

that some of the challenges were barred by the IRA’s preclusion of administrative and judicial review. As of the date of this

writing, all of the district court decisions have been appealed, and most of the appeals are currently pending before the U.S.

Courts of Appeals for the Second, Third, and Sixth Circuits. One decision dismissing a case on procedural grounds was

appealed to the Fifth Circuit, which issued a decision remanding the case back to the district court for further proceedings.

This report explains the APA arguments brought by AstraZeneca Pharmaceuticals and Novo Nordisk, the government’s

responses to these claims, and the federal district courts’ decisions in both cases. The constitutional claims are outside the

scope of this report but are discussed in CRS Report R47682, Constitutional Challenges to the Medicare Drug Price

Negotiation Program, by Hannah-Alise Rogers. The report concludes by identifying relevant considerations for the 118th

Congress as the litigation proceeds.

Congressional Research Service

APA Challenges to the Medicare Drug Price Negotiation Program

Contents

Legal Background ........................................................................................................................... 2

The Administrative Procedure Act ............................................................................................ 2

Defining a Qualifying Single Source Drug ............................................................................... 2

Bona Fide Marketing of a Product ............................................................................................ 4

The IRA’s Limitations on Judicial Review ............................................................................... 4

Drug Manufacturers’ Motions for Summary Judgment................................................................... 5

AstraZeneca’s Arguments ......................................................................................................... 6

Novo Nordisk’s Arguments ....................................................................................................... 7

Government’s Cross Motions for Summary Judgment ................................................................... 7

District Court Decisions ................................................................................................................ 10

AstraZeneca Pharms. v. Becerra ............................................................................................. 10

Novo Nordisk v. Becerra ..........................................................................................................11

Considerations for Congress.......................................................................................................... 13

Contacts

Author Information........................................................................................................................ 14

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APA Challenges to the Medicare Drug Price Negotiation Program

I

n 2022, Congress created the Medicare Drug Price Negotiation Program (the Program)

through a budget reconciliation measure known as the Inflation Reduction Act (IRA).1 The

IRA authorizes the Secretary of the Department of Health and Human Services (HHS) to

negotiate the prices of certain single-source drugs and biological products under Medicare Part B2

(physician administered drugs) and Medicare Part D3 (retail prescription drugs). The IRA directed

the HHS Centers for Medicare and Medicaid Services (CMS) to implement the first three years of

the Program (known as price years 2026-2028) through “program instruction or other forms of

program guidance.”4 For the initial price years 2026 and 2027, only Medicare Part D drugs are

eligible for selection; Part B drugs become eligible for selection in price year 2028.5

The IRA requires HHS to publish a list of selected drugs, enter into agreements with

manufacturers of the drugs selected for negotiation, negotiate a maximum fair price (MFP) for

those drugs with manufacturers, and monitor manufacturer compliance with Program

requirements.6 CMS selected the first 10 drugs for price negotiation on August 29, 2023,

including AstraZeneca’s drug Farxiga and Novo Nordisk’s Fiasp and NovoLog products.7 In

August 2024, HHS announced the prices of the first 10 selected drugs, which take effect on

January 1, 2026.8 According to updated agency guidance, the agency plans to select an additional

15 drugs for negotiation in February 2025; those prices will take effect on January 1, 2027.9

Beginning in June 2023, several pharmaceutical manufacturers, including AstraZeneca and Novo

Nordisk, as well as pharmaceutical trade associations, sued CMS in various federal district courts

across the country. At least 10 lawsuits have challenged the constitutionality of the Program on

various grounds, including under the First, Fifth, and Eighth Amendments.10 In addition to these

and other constitutional arguments, AstraZeneca and Novo Nordisk claimed that CMS’s

implementation of the Program violates the Administrative Procedure Act (APA).

This Report explains AstraZeneca and Novo Nordisk’s APA claims and the district courts’

decisions on those claims. In both cases, the pharmaceutical companies and the government filed

cross motions for summary judgment. In AstraZeneca’s case, the federal district court in

1 For more information on various health provisions of the IRA, see CRS Report R47396, Health Care Provisions of

the Budget Reconciliation Measure P.L. 117-169, coordinated by Katherine M. Kehres (2023).

2 For more information about Medicare Part B, see CRS Report R40425, Medicare Primer, coordinated by Patricia A.

Davis (2020).

3 For more information about Medicare Part D, see CRS Report R40611, Medicare Part D Prescription Drug Benefit,

by Laura A. Wreschnig (2023).

4 42 U.S.C. § 1320f-1 note.

5 Id. § 1320f-1(a)(3). For more information about how CMS selected the first 10 drugs, see CRS Report R47555,

Implementation of the Medicare Drug Price Negotiation Program: Centers for Medicare and Medicaid Guidance and

Legal Considerations, by Hannah-Alise Rogers (2023).

6 42 U.S.C. § 1320(a).

7 Press Release, HHS, HHS Selects the First Drugs for Medicare Drug Price Negotiation (Aug. 29, 2023),

https://www.hhs.gov/about/news/2023/08/29/hhs-selects-the-first-drugs-for-medicare-drug-price-negotiation.html.

8 Press Release, CMS, Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year

2026 (Aug. 15, 2024), https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-programnegotiated-prices-initial-price-applicability-year-2026.

9 Memorandum from Meena Seshamani, Deputy Administrator and Director of the Center for Medicare, on Medicare

Drug Price Negotiation to Interested Parties 26 (Oct. 2, 2024), https://www.cms.gov/files/document/medicare-drugprice-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf [hereinafter Guidance

for Price Year 2027].

10 For more information on the constitutional challenges, see CRS Report R47682, Constitutional Challenges to the

Medicare Drug Price Negotiation Program, by Hannah-Alise Rogers, at 3 (2024).

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Delaware issued its decision on March 1, 2024.11 The federal district court in New Jersey issued

its decision in Novo Nordisk’s case on July 31, 2024.12 Both rulings have been appealed to the

U.S. Court of Appeals for the Third Circuit.13

Legal Background

The Administrative Procedure Act

The APA is a federal statute that permits judicial review of “agency action[s] made reviewable by

statute,” as well as “final agency action for which there is no other adequate remedy in a court.”14

The APA directs reviewing courts to “hold unlawful and set aside agency action, findings, and

conclusions” when they are “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.”15 Additionally, agency actions that are characterized as “ultra vires” may

also be reviewed under the APA.16 In an ultra vires action, even a statute that precludes judicial

review of an agency’s determinations may be reviewed by a court if the agency’s action can be

characterized as violating an unambiguous statutory mandate.17

Defining a Qualifying Single Source Drug

Before selecting the first 10 drugs for negotiation, the Secretary of HHS identified the pool of

“qualifying single source drugs”18 (QSSDs) in accordance with the framework set forth in the

IRA. For price year 2026, for a small molecule drug to be a QSSD,19 it had to be a Medicare Part

D drug that (1) was approved by the U.S. Food and Drug Administration (FDA) and marketed

pursuant to such approval, (2) had been FDA approved for at least seven years, and (3) did not

have an approved and marketed generic version.20 For a biologic to be a QSSD,21 the product had

to be a Medicare Part D drug that (1) was licensed under the Public Health Service Act (PHSA)

and was marketed under the license, (2) had been licensed for at least 11 years, and (3) did not

have a licensed and marketed biosimilar.22

11 AstraZeneca Pharms. v. Becerra, No. 23-931, 2024 WL 895036 (D. Del. Mar. 1, 2024).

12 Novo Nordisk v. Becerra, No. 23-20814, 2024 WL 3594413 (D.N.J. July 31, 2024).

13 Notice, AstraZeneca Pharms. v. Becerra, No. 24-1819 (3d Cir. May 2, 2024), ECF No. 1; Notice, Novo Nordisk v.

Becerra, No. 24-2510 (3d Cir. Aug. 19, 2024), ECF No. 1.

14 5 U.S.C. §§ 551–559; CRS Legal Sidebar LSB10558, Judicial Review Under the Administrative Procedure Act

(APA), by Jonathan M. Gaffney.

15 5 U.S.C. § 706(2)(A). For more information on judicial review under the APA, see CRS Report R44699, An

Introduction to Judicial Review of Federal Agency Action, by Jared P. Cole, at 9 (2016).

16 CRS Report R44699, supra note 15, at 5.

17 See, e.g., Key Medical Supply, Inc. v. Burwell, 764 F.3d 955, 962 (8th Cir. 2014).

18 42 U.S.C. § 1320f-1(e).

19 A small molecule drug is one that is synthesized in a laboratory. For more information, see CRS In Focus IF11083,

Medical Product Regulation: Drugs, Biologics, and Devices, by Amanda K. Sarata and Hassan Z. Sheikh.

20 42 U.S.C. § 1320f-1(e).

21 The Public Health Service Act defines a “biological product” (or biologic) as “a virus, therapeutic serum, toxin,

antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, or

arsphenamine or derivative of arsphenamine . . . applicable to the prevention, treatment, or cure of a disease or

condition of human beings.” 42 U.S.C. § 262(i)(1).

22 Id. § 1320f-1(e).

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After identifying the QSSDs, CMS calculated Medicare’s total Part D expenditures for each

QSSD by looking at Part D prescription drug cost and payment (PDE) data between June 1, 2022,

and May 31, 2023.23 The 50 drugs with the highest expenditures were considered “negotiationeligible drugs.”24 In determining if a QSSD meets the definition of a negotiation-eligible drug, the

IRA directed CMS to “use data that is aggregated across dosage forms and strengths of the drug,

including new formulations of the drug . . . and not based on the specific formulation or package

size of the drug.”25 After applying any relevant statutory exceptions, CMS then selected the top

10 highest-spend Medicare drugs for negotiation.26

In its Initial Guidance issued in March 2023, CMS stated it would apply the data aggregation

provision discussed above to the definition of what it considered a single QSSD.27 CMS

announced that “all dosage forms and strengths of the drug with the same active moiety and the

same holder of a New Drug Application (NDA),” even if the products are marketed under

different NDAs, would be treated as one drug for QSSD determinations.28 Similarly, CMS said

that all dosage forms and strengths of a biologic “with the same active ingredient and the same

holder of a Biologics License Application (BLA),”29 even if the products are marketed under

different BLAs, would be considered the same QSSD. CMS received a variety of stakeholder

comments in response to this Initial Guidance, which it addressed in the Revised Guidance issued

in June 2023.30 In that guidance, CMS defended its decision to define QSSD so that multiple

products with the same active ingredient could be selected as a single QSSD, stating that “the

aggregation rules under [the IRA] are clear.”31 While some commenters suggested that a QSSD

should be defined based on each distinct NDA or BLA, CMS responded that such an approach

would be “inconsistent” with the statute.32

Similarly, in Guidance for Price Year 2027, released in October 2024, the agency again addressed

comments on the aggregation of various dosage forms and strengths of drugs with the same active

moiety for purposes of identifying the QSSD, defending its position in previous guidance.33 CMS

agreed with comments arguing that aggregating across dosage forms and strengths would

“decrease incentives for pharmaceutical manufacturers to engage in product hopping.”34 The

23 Memorandum from Meena Seshamani, Deputy Administrator and Director of the Center for Medicare, on Medicare

Drug Price Negotiation to Interested Parties, at 12 (Mar. 15, 2023), https://www.cms.gov/files/document/medicaredrug-price-negotiation-program-initial-guidance.pdf [hereinafter Initial Guidance].

For more information about PDE data, see Centers for Medicare & Medicaid Servs., Questions and Answers on

Obtaining Prescription Drug Event (PDE) Data, https://www.cms.gov/medicare/prescription-drugcoverage/prescriptiondrugcovgenin/downloads/partdclaimsdataqa.pdf (last visited Nov. 13, 2024).

24 Initial Guidance, supra note 23, at 15.

25 42 U.S.C. § 1320f-1(d)(3)(B).

26 CRS Report R47555, Implementation of the Medicare Drug Price Negotiation Program: Centers for Medicare and

Medicaid Guidance and Legal Considerations, by Hannah-Alise Rogers, at 3 (2023).

27 Initial Guidance, supra note 23, at 8.

28 Id. In order to market a new drug in the United States, a manufacturer must file and FDA must approve an NDA. See

generally 21 U.S.C § 355. For more information, see CRS In Focus IF11083, supra note 19.

29 Id. In order to market a biologic in the United States, a manufacturer must file and FDA must approve a BLA. See

generally 42 U.S.C. § 262; see also CRS In Focus IF11083, supra note 19.

30 Memorandum from Meena Seshamani, Deputy Administrator and Director of the Center for Medicare, on Medicare

Drug Price Negotiation to Interested Parties, at 11 (June 30, 2023), https://www.cms.gov/files/document/revisedmedicare-drug-price-negotiation-program-guidance-june-2023.pdf [hereinafter Revised Guidance].

31 Id.

32

Id.

33 Guidance for Price Year 2027, supra note 9, at 12.

34 Id.

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agency reiterated its position that the statute’s requirements “ensure[] that products by the same

sponsor with the same active moiety / active ingredient are subject to the same processes,” which

limits manufacturers’ ability to “inappropriately exclude from the Negotiation Program drug

products that might otherwise be eligible based on modest or minor modifications.”35

Bona Fide Marketing of a Product

As described above, the IRA’s definition of QSSD is limited to small molecule drugs and

biologics with no generic or biosimilar versions on the market. Thus, if a product has approved

and marketed generic or biosimilar competition, it will not qualify as a QSSD for purposes of

selection for price negotiation. In its Initial Guidance, CMS stated that it will consider a

competing generic drug or biosimilar to be marketed “when the[] data reveal that the

manufacturer . . . has engaged in bona fide marketing of that drug or product.”36 CMS advised

that the agency “intends to monitor whether robust and meaningful competition exists in the

market.”37 In responding to stakeholder comments about the “bona fide marketing” requirement,

CMS noted in its Revised Guidance that “Congress contemplated that a generic or biosimilar

must have a continuing presence on the market in order to affect CMS’s determination whether a

drug should be selected” as a QSSD.38

In response to critiques that the agency lacked the authority to create the “bona fide marketing”

requirement, CMS stated in its Guidance for Price Year 2027 that Congress “purposefully used

different terminology” in the IRA to require a generic or biosimilar product to have a “continuing

presence on the market in order to affect” the QSSD status.39 The agency pointed to the IRA’s use

of the phrase “is marketed,” contrasting it with a different section of the Social Security Act

which refers to the date that a drug is “first marketed.”40 The agency pressed that the statute

“requires more than solely token or de minimis availability of the [competing] products,” to

disincentivize manufacturers from executing a market-limiting agreement that could result in

decreased product availability.41 CMS also described the “time lag” in PDE data (i.e., the time

difference between when a generic or biosimilar competitor first enters the market and when it is

actually used to fill Part D prescriptions) as “relatively short,” arguing that Part D plans are

required to submit updated data to CMS within 30 days of receipt of the claim.42

The IRA’s Limitations on Judicial Review

The IRA limits administrative and judicial review of some of CMS’s determinations for purposes

of carrying out the Program. First, the statute precludes judicial review of the determination of

drug units, which it defines as the “lowest identifiable amount (such as a capsule or tablet,

milligram of molecules, or grams) of the drug or biological product that is dispensed or

furnished.”43 Second, the IRA precludes review of certain aspects of the determination of whether

the drug is a QSSD (under Section 1320f-1(e)), whether it is a negotiation-eligible drug (under

35 Id. at 13.

36 Initial Guidance, supra note 23, at 10.

37 Id. at 67.

38 Revised Guidance, supra note 30, at 72.

39 Guidance for Price Year 2027, supra note 9, at 20.

40 Id.

41

Id.

42 Id. at 21.

43 42 U.S.C. §§ 1320f(c)(6), 1320f-7; see also Guidance for Price Year 2027, supra note 9.

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Section 1320f-1(d)), and the selection of drugs (under Section 1320f-1(b)).44 Third, review of the

“determination” of the MFP (under Sections 1320f-3(b) and (f)) is also barred.45 Finally, the IRA

precludes review of the agency’s determination of renegotiation-eligible drugs (under Section

1320f-3(f)(2)-(3)), which includes CMS’s decision to reselect a drug for negotiation in

subsequent years and renegotiate its MFP.46

While these limitations on judicial review do not stop manufacturers from challenging the

underlying constitutionality of the IRA, as discussed below, at least one court has interpreted

them as barring certain other APA claims.47 If additional cases challenging CMS’s

implementation of the Program are filed under the APA in the future, courts may have to decide

whether the IRA’s preclusion language limits federal courts’ subject matter jurisdiction over those

claims.48

Drug Manufacturers’ Motions for Summary

Judgment

Drug manufacturers AstraZeneca and Novo Nordisk each brought challenges against CMS’s

implementation of the Program under the APA. AstraZeneca brought its case in federal district

court in Delaware; Novo Nordisk brought its challenge in federal district court in New Jersey. For

price year 2026, CMS selected AstraZeneca’s drug Farxiga, which is used to treat diabetes.49 The

agency also selected Novo Nordisk’s Fiasp and NovoLog products, all of which use the same

active ingredient, insulin aspart; these products are also used to treat diabetes.50 The nature of the

manufacturers’ APA claims differs from the other constitutional challenges brought against the

Program. The constitutional claims address Congress’ underlying authority to enact the IRA,51

44 42 U.S.C. § 1320f-7(2). Section 1320f-1(b) authorizes the Secretary to rank negotiation-eligible drugs and, for price

year 2026, select the 10 drugs with the highest total Medicare expenditures. Id. § 1320f-1(b)(1). Section 1320f-1(d)

defines “negotiation-eligible drug,” as well as “Part D High Spend Drugs” and “Part B High Spend drugs,” for

purposes of the Program. Id. § 1320f-1(d)(1)(A)-(B). Section 1320f-1(d)(2) also contains the small biotech exception,

outlining which Part B and D drugs qualify for the exception. See generally id. § 1320f-1(d)(2)(A)-(B). The definition

of QSSD is contained in Section 1320f-1(e)(1), authorized generics are defined in Section 1320f-1(e)(2), and the

exceptions for orphan drugs, low-spend drugs, and plasma-derived products are contained in Section 1320f-1(e)(3). See

generally id. § 1320f-1(e)(1)-(3).

45 42 U.S.C. § 1320f-7(3). Section 1320f-3(b)(1) authorizes the Secretary to develop and use a methodology to

“achieve” the MFP. Id. § 1320f-3(b)(1). Several provisions within Section 1320f-3(b)(2) provide specific timelines for

CMS to implement the Program, including dates for drug manufacturers to submit information to CMS, for CMS to

make an initial offer, for manufacturers to make a counteroffer, and for CMS to respond. Id. § 1320f-3(b)(2)(A)-(E).

This subsection also prohibits the Secretary from both making an offer that exceeds the ceiling price, as described in

§ 1320f-3(c), and from offering a price below the floor described in § 1320f-3(d), if applicable. Id. § 1320f3(b)(2)(F)(i)-(ii).

46 Id. § 1320f-7(4). Section 1320f-3(f) describes the renegotiation process, to begin in 2028, for negotiation-eligible

drugs. Id. § 1320f-3(f). CMS has not yet issued guidance for the renegotiation process of drugs. See Guidance for Price

Year 2027, supra note 9, at 44.

47 See, e.g., Novo Nordisk Inc. v. Becerra, No. 23-20814, 2024 WL 3594413 (D.N.J. July 31, 2024).

48 For more information about the potential interpretations of the limitations on judicial review, see CRS Report

R47555, Implementation of the Medicare Drug Price Negotiation Program: Centers for Medicare and Medicaid

Guidance and Legal Considerations, by Hannah-Alise Rogers (2023).

49 Press Release, HHS, HHS Selects the First Drugs for Medicare Drug Price Negotiation (Aug. 29, 2023),

https://www.hhs.gov/about/news/2023/08/29/hhs-selects-the-first-drugs-for-medicare-drug-price-negotiation.html.

50 Id.

51 For more information on the constitutional challenges, see CRS Report R47682, supra note 10.

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while the APA claims address CMS’s interpretation of the statute and how the agency has

operationalized the program.52

AstraZeneca’s Arguments

Both AstraZeneca and Novo Nordisk challenged CMS’s definition of QSSD and the bona fide

marketing requirement under the APA. In its motion for summary judgment, AstraZeneca argued

that CMS’s QSSD definition and the bona fide marketing requirement violate the plain language

of the IRA and are arbitrary and capricious under the APA.53 The drugmaker claimed that multiple

drug products can be the same QSSD “only where the . . . products were approved by the FDA

under the same NDA or BLA” and that CMS “lacks the authority to aggregate different drug

products approved under different NDAs or BLAs” as the same QSSD.54 AstraZeneca argued that

QSSDs should be based on distinct NDAs or BLAs, not on active ingredients, because the IRA

definition of QSSD cross-references a term defined in the Medicare statute, which, in turn, crossreferences a term defined in the Medicaid statute that ultimately refers to distinct NDAs or

BLAs.55 The company further alleged that the effects of CMS’s QSSD policy “[would] be felt

across AstraZeneca’s product portfolio” because the existing definition could subject a new

Farxiga product to immediate price negotiation if the product contains the same active ingredient

as the original product.56 AstraZeneca also said that the QSSD definition is arbitrary and

capricious because it “discourages” manufacturers from improving their existing products.57

With respect to the bona fide marketing requirement, AstraZeneca claimed that CMS’s

interpretation is contrary to the plain language of the IRA as well as arbitrary and capricious.58

The manufacturer argued that “[n]owhere in the law did Congress include qualifying language

that might narrow or otherwise change the ordinary meaning of the word ‘marketed.’” 59

AstraZeneca described the IRA’s marketing requirement as a “check-the-box inquiry,” and

pointed to an existing Medicaid Drug Rebate Program policy that defines “marketed” by

reference to when a product is available for sale.60 The company also argued that in Asgrow Seed

Co. v. Winterboer,61 the Supreme Court found that the term “marketing” usually “refers to the act

of holding forth property for sale.”62 AstraZeneca claimed that CMS’s “holistic” and “totality of

the circumstances” inquiry is too subjective and, as a result of CMS’s bona fide marketing

52 See generally Opening Brief in Support of Plaintiffs’ Motion for Summary Judgment, AstraZeneca Pharms. LP v.

Becerra, No. 23-931 (D. Del. Sept. 26, 2023), ECF No. 19; Plaintiffs’ Memorandum in Support of Their Motion for

Summary Judgment, Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814, (D.N.J. Dec. 8, 2023), ECF No. 28.

53 Opening Brief in Support of Plaintiffs’ Motion for Summary Judgment at 14, AstraZeneca Pharms. LP v. Becerra,

No. 23-931 (D. Del. Sept. 26, 2023), ECF No. 19.

54 Id.

55 Id. at 15. The IRA references the definition of a “covered Part D drug” in the Medicare statute (42 U.S.C. § 1395w102(e)). That section of the Medicare statute references the definition of “covered outpatient drug” in the Medicaid

statute (42 U.S.C. § 1496r-8(k)(2)(A)-(B)), which references the drug’s NDA or BLA.

56 Opening Brief in Support of Plaintiffs’ Motion for Summary Judgment at 16–17, AstraZeneca Pharms. LP v.

Becerra, No. 23-931, (D. Del. Dec. 8, 2023), ECF No. 19.

57 Id. at 3.

58 Id. at 18.

59 Id. at 19.

60

Id.

61 513 U.S. 179 (1995).

62 Id. at 187.

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requirement, a product’s price could be subject to negotiation while also being subject to generic

competition.63

Novo Nordisk’s Arguments

Novo Nordisk took a slightly different approach in its summary judgment motion, claiming that

CMS exceeded its statutory authority in several ways, including by selecting more than 10 drugs

for negotiation, selecting a biologic that had not been marketed for at least 11 years, and by

selecting QSSDs that have generic or biosimilar competition.64 The drugmaker argued that by

selecting six of its NovoLog and Fiasp products as a single QSSD, CMS violated the IRA’s

requirement that CMS select no more than 10 drugs for price year 2026.65 Similar to AstraZeneca,

Novo Nordisk said that QSSDs should be based on each NDA or BLA, because FDA approvals

and exclusivities are product specific, noting that the IRA “says nothing about active moieties or

active ingredients.”66

The company also argued that CMS’s focus on the active moiety (i.e., insulin aspart), rather than

a specific product, has led to the selection of both Part B and Part D drugs, in violation of the

IRA, which provides that only Part D drugs may be selected for negotiation in 2026.67 The

manufacturer pointed out that some of its Fiasp products are covered primarily under Part D,

while others are covered primarily under Part B, but that CMS has included both types of

products on the list of selected drugs.68 Novo Nordisk also argued that the IRA’s provision

limiting administrative and judicial review should not apply, alleging that CMS’s action is ultra

vires under the APA (i.e., beyond its legal authority).69

Government’s Cross Motions for Summary

Judgment

The government opposed the drug manufacturers’ motions and filed cross motions for summary

judgment in both cases, making both procedural and substantive arguments. The government first

asserted that AstraZeneca lacked standing to bring the APA challenges, because the company did

not demonstrate that the QSSD definition impacted Farxiga’s selection.70 According to the

government, Farxiga is manufactured under a single NDA and has one dosage form, two

strengths, and no currently approved generic competitors.71 Thus, the government said,

63 Opening Brief in Support of Plaintiffs’ Motion for Summary Judgment at 21, AstraZeneca Pharms. LP v. Becerra,

No. 23-931 (D. Del. Sept. 26, 2023) ECF No. 19.

64 Plaintiffs’ Memorandum in Support of Their Motion for Summary Judgment, Novo Nordisk, Inc. v. Becerra, No. 23CV-20814 (D.N.J. Dec. 8, 2023), ECF No. 28.

65 Id. at 17; see 42 U.S.C. § 1320f-1(a).

66 Plaintiffs’ Memorandum in Support of Their Motion for Summary Judgment at 19, Novo Nordisk, Inc. v. Becerra,

No. 23-CV-20814 (D.N.J. Dec. 8, 2023), ECF No. 28.

67 42 U.S.C. § 1320f-1(d).

68 Plaintiffs’ Memorandum in Support of Their Motion for Summary Judgment at 23, Novo Nordisk, Inc. v. Becerra,

No. 23-CV-20814 (D.N.J. Dec. 8, 2023), ECF No. 28.

69 42 U.S.C. § 1320f-7. See CRS Report R47555, Implementation of the Medicare Drug Price Negotiation Program:

Centers for Medicare and Medicaid Guidance and Legal Considerations, by Hannah-Alise Rogers, at 10 (2023); CRS

Report R44699, An Introduction to Judicial Review of Federal Agency Action, by Jared P. Cole, at 5 (2016).

70 Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment and Cross-motion at 14, AstraZeneca Pharms.

LP v. Becerra, No. 23-931, 2024 WL (D. Del. Nov. 1, 2023), ECF No. 21.

71 Id. at 15–16.

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AstraZeneca was not actually harmed by CMS’s interpretation of the QSSD definition and lacked

standing to challenge it.72

The government next argued that the plain text of the IRA precludes judicial review of both

AstraZeneca’s and Novo Nordisk’s claims, including their ultra vires challenges.73 The

government relied on several D.C. Circuit cases upholding provisions limiting judicial review in

other parts of the Medicare statute, arguing that Congress’s express preclusion of judicial review

in the IRA makes the QSSD definition and the selection of drugs unreviewable.74 The government

pointed to DCH Regional Medical Center v. Azar, where a hospital challenged a Medicare

payment amount, but where the Medicare Act limited judicial review of “any estimate” the

Secretary used to calculate the payment.75 The D.C. Circuit upheld a district court’s dismissal of

the case, finding that judicial review was precluded because the methodology HHS used to

calculate the payment amount was “inextricably intertwined” with the estimate itself.76 Even

though the hospital argued that the action was reviewable under the APA as ultra vires, the court

disagreed, holding that CMS’s payment methodology was not an “obvious violation of a clear

statutory command.”77 As in the DHC Regional Medical Center case, the government similarly

argued in its summary judgment motions against AstraZeneca and Novo Nordisk that because the

statute precludes judicial review of the selection of drugs, the manufacturers’ challenges to

CMS’s authority to “prescribe methodologies” for purposes of selection are “inextricably

intertwined” with the selection itself and thus should fail.78

On the merits, the government argued in both cases that using active moieties and ingredients in

the QSSD definition does not violate the IRA.79 In the government’s view, a drug’s particular

NDA is irrelevant because the statute clearly states that CMS should use “aggregated data across

multiple dosage forms and strengths” and directs CMS to apply the negotiated price across

different forms and strengths of the drug.80 The government characterized the manufacturers’

interpretation of the data aggregation provision as “nonsensical” and asserted that the Revised

Guidance is not arbitrary or capricious because CMS reasonably explained its approach to the

72 Id. at 17.

73 Id. at 14; Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment and in Support of

Defendants’ Cross-motion at 13, Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814 (D.N.J. Jan. 26, 2024), ECF No. 37.

74 E.g., Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment and in Support of

Defendants’ Cross-motion at 14, Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814 (D.N.J. Jan. 26, 2024), ECF No. 37.

75 Id. (citing DCH Reg’l Med. Ctr. v. Azar, 925 F.3d 503 (D.D.C. 2019)). The DHC Regional Medical Center case

specifically concerned the calculation of disproportionate share hospital (DSH) payments under the Medicare statute.

As the D.C. Circuit explained, the issue in the case was whether HHS’s interpretation of the statute’s “additional

payment” for DSH hospitals was precluded from judicial review. 925 F.3d at 504. The statute lists three factors that the

Secretary is to consider in the calculation of the DSH payment, and the statute says that “[t]here shall be no

administrative or judicial review . . . [of] [a]ny estimate of the Secretary for purposes of determining the factors”

described in the statute. 42 U.S.C. § 1395ww(r)(3)(A). The hospital challenging its DSH payment argued that judicial

review was not precluded because it was challenging the methodology employed by the Secretary in the calculation of

one of the factors, not the factor itself. DCH Reg’l Med. Ctr., 925 F.3d at 505 (emphasis added). In finding that the

statute precluded judicial review, the D.C. Circuit concluded, “In this statutory scheme, a challenge to the methodology

for estimating uncompensated care is unavoidably a challenge to the estimates themselves. The statute draws no

distinction between the two.” Id. at 506.

76 DCH Reg’l Med. Ctr., 925 F.3d 503, 510.

77 Id.

78 Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment and in Support of Defendants’

Cross-motion at 18, Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814 (D.N.J. Jan. 26, 2024), ECF No. 37.

79 Id. at 21; Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment and Cross-motion at 27, AstraZeneca

Pharms. LP v. Becerra, No. 23-931 (D. Del. Nov. 1, 2023), ECF No. 21.

80 42 U.S.C. § 1320f-1(d)(3)(B).

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QSSD definition.81 The government claimed that an NDA-based approach would violate the

statute, because different dosage forms and strengths of a drug can be approved under multiple

NDAs, depending on how the manufacturer applied for FDA approval.82 The government pointed

to the statute’s “repeated references to the possibility that a single negotiation-eligible drug would

comprise multiple dosage forms, strengths, and formulations—and have multiple FDA approvals”

and argued that these references “would make no sense if Congress had intended CMS to follow

FDA’s product-specific approach.”83 The government further reasoned that the QSSD definition

ensures that drug manufacturers will not engage in “product hopping” as a way of avoiding

negotiation, and that there is nothing arbitrary about a newly marketed product being subject to

price negotiation.84

With respect to Novo Nordisk’s argument that the QSSD conflates Part B and Part D drugs in

violation of the statute, the government said the statute “directs CMS to select drugs based on

relative spending—and makes only Medicare Part D spending a relevant ranking criterion for

price applicability years 2026 and 2027.”85 In other words, the government says it is “immaterial”

that the manufacturer’s insulin drugs are reimbursed under both Parts B and D, because the

“practical effect” of the statute is that Part B drugs are not selected for negotiation in price year

2026 unless they also have the highest Part D expenditures.86 The government argued NovoLog

meets both criteria and thus that the drug is not exempted from selection simply because it also

receives reimbursement under Part B.87

Lastly, the government argued that CMS’s bona fide marketing standard is consistent with the

IRA.88 The government explained that the standard is needed to ensure that manufacturers cannot

avoid negotiation by contracting with a generic competitor to launch a de minimis amount of a

generic drug or biosimilar, thereby exempting it from the QSSD definition.89 The government

also argued that the specific language of the IRA indicates that Congress intended for CMS to

“exercise some judgment in applying the standard,” and that the manufacturers’ interpretation of

the IRA would render the marketing requirement “meaningless.”90 The government disputed the

relevance of other CMS interpretations of “marketing” that the manufacturers assert lack a bona

fide requirement, arguing that in those instances de minimis marketing was not a concern.91

81 Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment and Cross-motion at 30, AstraZeneca Pharms.

LP v. Becerra, No. 23-931 (D. Del. Nov. 1, 2023), ECF No. 21; Memorandum of Law in Opposition to Plaintiff’s

Motion for Summary Judgment and in Support of Defendants’ Cross-motion at 27, Novo Nordisk, Inc. v. Becerra, No.

23-CV-20814, 2024 WL 3594413 (D.N.J. Jan. 26, 2024), ECF No. 37; see also Revised Guidance at 11.

82 42 U.S.C. § 1320f-1(d)(3)(B).

83 Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment and in Support of Defendants’

Cross-motion at 23, Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814 (D.N.J. Jan. 26, 2024), ECF No. 37.

84 Id. at 27; Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment and Cross-motion at 31, AstraZeneca

Pharms. LP v. Becerra, No. 23-931 (D. Del. Nov. 1, 2023), ECF No. 21. For more information about product hopping,

see CRS In Focus IF11561, Pharmaceutical Patenting Practices: A Legal Overview, coordinated by Kevin J. Hickey

(2020).

85 Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment and in Support of Defendants’

Cross-motion at 27, Novo Nordisk, Inc. v. Becerra, No. 23-20814 (D.N.J. Jan. 26, 2024), ECF No. 37.

86 Id. at 28.

87 Id.

88 Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment and Cross-motion at 32, AstraZeneca Pharms.

LP v. Becerra, No. 23-931 (D. Del. Nov. 1, 2023), ECF No. 21.

89 Id. at 33.

90 Id. at 34, 36. See 42 U.S.C. § 1320f-1(c)(1)(B).

91 Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment and Cross-motion at 38, AstraZeneca Pharms.

LP v. Becerra, No. 23-931 (D. Del. Nov. 1, 2023), ECF No. 21.

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District Court Decisions

AstraZeneca Pharms. v. Becerra

The federal district court in Delaware issued its decision on the cross motions for summary

judgment in AstraZeneca’s case on March 1, 2024, finding that the court lacked jurisdiction to

consider the company’s APA claims because the company lacked Article III standing.92 Under

Article III of the Constitution, federal court jurisdiction is limited to “Cases” and

“Controversies,” and a plaintiff must demonstrate standing in order to bring a lawsuit.93 The

Supreme Court has held that judicial standing is satisfied when the plaintiff demonstrates a

“concrete, particularized, and actual or imminent” injury which was “likely caused by the

defendant” and that “would likely be redressed by” a court.94 In AstraZeneca’s case, the company

made several arguments to try to establish that it had standing, each of which the court found

insufficient.

The court observed that AstraZeneca’s arguments about the harm it suffered as a result of CMS’s

guidance wasn’t the actual selection of its drug, which the court said “made sense,” because

neither the QSSD nor the bona fide marketing arguments “had any bearing on CMS’s decision to

designate Farxiga as a selected drug.”95 (In other words, even assuming AstraZeneca was correct

that CMS’s guidance on these two aspects of the Program was in excess of its statutory authority,

that would not have led to a different outcome for AstraZeneca, because Farxiga would still have

been selected for negotiation.) Instead, the company described the harm it suffered from CMS’s

guidance as a decrease in incentives to invest in further research and development, both for

Farxiga and for other products.96 The court was unpersuaded by these arguments, characterizing

them as an “unprecedented theory” of standing, because the injuries were not concrete, actual, or

imminent.97 The court said, “Astrazeneca’s alleged injury is premised on a hypothetical scenario

that could only be realized if [the company] were to develop a new formulation or use of

Farxiga’s active moiety, if the FDA approved that new formulation or use under a new NDA, and

if Farxiga were still a selected drug for the Program at that (unknown) time.”98 The necessity of

the word “if”, the court reasoned, demonstrates that the company had not suffered actual or

imminent harm from the CMS guidance.99 And with respect to the decrease in incentives to

research and develop new drugs, the court said this argument did not establish standing because

the “harm alleged . . . is too vague to establish a cognizable injury.”100

As for AstraZeneca’s other standing arguments, the court was likewise unpersuaded that the

company had suffered an actual harm. The court found that AstraZeneca’s arguments related to

the bona fide marketing standard similarly failed and that the company’s characterization of the

alleged harm contained “many flaws.”101 The company argued that CMS’s bona fide marketing

92 AstraZeneca Pharms. LP v. Becerra, No. 23-931, 2024 WL 895036 at *13 (D. Del. Mar. 1, 2024), appeal filed No.

24-1819 (3d Cir. May 2, 2024).

93 Id. at *7 (citing Lujan v. Defs. of Wildlife, 504 U.S. 559 (1992)).

94 Id. (quoting TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021)).

95 Id.

96 Id. at *8.

97 Id.

98 Id.

99

Id.

100 Id. at *11.

101 Id. at *10.

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requirement would harm its business by subjecting Farxiga to both generic competition and an

MFP, but the court observed that the IRA does not “suggest[] in any way that a selected drug is

not subject to the Act’s price controls if it faces generic competition.”102 Rather, Section 1320f1(c) of the IRA provides that a selected drug “shall not be subject to the negotiation process” if a

generic is approved and marketed “before or during the negotiation period.”103 The court reasoned

that because the price year 2026 negotiation period went from October 1, 2023, to August 1,

2024, and because Farxiga did not face generic competition during that time, the statute, rather

than the agency’s guidance, was the root of the issue.104 The court thus held that the alleged harm

from the agency’s bona fide marketing test “cannot meet the causation and redressability

requirements for standing, as it was not caused by the Guidance and could not be remedied by

vacating the Guidance.”105 The court also said, among other reasons, that the company had not

alleged or established that its selected drug would experience insufficient generic competition,

and that it was “highly unlikely” that the 17 manufacturers who asked for FDA approval to

market the generic of Farxiga thus far intended to do so “in only a de minimis manner.”106

Finally, the court addressed the standing arguments that AstraZeneca raised during oral argument,

but which it did not mention in its briefs.107 At that time, the company stated that it was unable to

accurately evaluate Farxiga’s value for purposes of making a counteroffer to CMS, due to the

agency’s construction of the QSSD and the bona fide marketing requirements in the guidance.108

The court disagreed, stating, “Of course, AstraZeneca does ‘know the impact of CMS’s

[allegedly] flawed guidance on [its] ability to negotiate,’” because they described it “in detail” in

the complaint and briefs.109 The court thus found that the company could not “credibly argue that

it is unable to understand the Guidance or how [it] applies as written to Farxiga.”110 The court

also held that the company’s argument was insufficient to support Article III standing, reasoning

that “[t]he only uncertainty relating to the Guidance comes from the filing of this lawsuit.”111

Because the court found that AstraZeneca did not have Article III standing to bring any of its

claims, it did not evaluate whether any of these claims were precluded by the statute’s prohibition

on judicial review.112 AstraZeneca has appealed the district court’s ruling to the U.S. Court of

Appeals for the Third Circuit.113

Novo Nordisk v. Becerra

The New Jersey federal district court issued its decision on the cross motions filed in Novo

Nordisk’s case on July 31, 2024, finding that the manufacturer lacked both subject matter

jurisdiction and standing to bring its APA challenges.114 With respect to the drug manufacturer’s

102 Id.

103 Id. (quoting 42 U.S.C. § 1320f-1(c)(2)).

104 Id. at *10.

105 Id.

106 Id. at *11.

107 Id. at *12.

108 Id.

109 Id.

110 Id. at *12.

111 Id.

112 Id. at *13.

113 Notice, AstraZeneca Pharms. v. Becerra, No. 24-1819 (3d Cir. May 2, 2024), ECF No. 1.

114 Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814, 2024 WL 3594413 (D.N.J. July 31, 2024), appeal filed, Novo

Nordisk, Inc. v. Becerra, No. 24-2510 (3d Cir. Aug. 19, 2024), ECF No. 1.

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claims that CMS wrongfully selected a biologic that had not been approved for 11 years,

incorrectly aggregated its product sales in order to determine its “high spend” status, and blurred

the lines between Medicare Parts B and D, the court found that the IRA’s provision precluding

judicial review divested the court of jurisdiction over these claims.115 The court reviewed the

statute’s directive that CMS’s “selection of drugs,” the agency’s “determination of negotiationeligible drugs,” and its “determination of qualifying single source drugs” were not subject to

administrative or judicial review.116 The court ruled that it did not have subject matter jurisdiction

over Novo Nordisk’s first three claims, because they related to the agency’s “underlying

determinations that led to its identification” of the manufacturer’s selected drug, and CMS’s

selection of drugs was precluded from judicial review.117 Further, the court characterized the

IRA’s limitation on judicial review as “an express statutory preclusion” that effectively prohibited

ultra vires review.118 In support of this holding, the court cited a 2022 D.C. Circuit decision

explaining that review of an ultra vires claim “is available where (i) there is no express statutory

preclusion of all judicial review; (ii) ‘there is no alternative procedure for review of the statutory

claim; and (iii) the agency plainly acts in excess of its delegated powers and contrary to a specific

prohibition in the statute that is clear and mandatory[.]’”119

With respect to Novo Nordisk’s claim that CMS exceeded the IRA’s limit of 10 selected drugs for

price year 2026, the court found that the drugmaker lacked standing to bring this challenge, which

was not precluded by the statute’s limitation on judicial review.120 The court observed that the

company’s complaint concluded with a “general prayer for relief based on all of their claims,”

and it found this requested relief “overbroad.”121 The court said the manufacturer was attempting

to enjoin CMS from implementing the IRA “as a whole and to declare invalid CMS’s entire

guidance” and that, as such, the drugmaker failed to demonstrate standing.122 Novo Nordisk

appealed the district court’s ruling to the U.S. Court of Appeals for the Third Circuit.123

115 Id. at *3.

116 Id.

117 Id.

118 Id.

119 Fed. Express Corp. v. United States Dep’t of Com., 39 F.4th 756, 764 (D.C. Cir. 2022) (quoting Nyunt v. Chairman,

Broad. Bd. of Governors, 589 F.3d 445, 449 (D.C. Cir. 2009)).

120 Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814, 2024 WL 3594413 (D.N.J. July 31, 2024), at *4. The court

observed that the directive to select 10 products is found in 42 U.S.C. § 1320f-1(a)(1), which is not listed as one of the

sections exempt from administrative or judicial review. Id.; see also 42 U.S.C. § 1320f-7.

121

Novo Nordisk, Inc. v. Becerra, No. 23-CV-20814, 2024 WL 3594413 (D.N.J. July 31, 2024), at *4.

122 Id.

123 Notice, Novo Nordisk v. Becerra, No. 24-2510 (3d Cir. Aug. 19, 2024), ECF No. 1.

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Considerations for Congress

As litigation over the Medicare Drug Price Negotiation Program continues to unfold, many

observers are keeping a close eye on both the constitutional and APA arguments being made in

the cases.124 Several of the manufacturers’ arguments challenging CMS’s guidance seem to raise

larger questions, including how much leeway an agency should have to interpret a statute and

how specific Congress needs to be when delegating authority to an agency to carry out a new

program, limiting judicial review, or directing an agency to carry out a particular authority via

guidance. Some law firms representing drug manufacturers suggest that the Supreme Court’s

recent ruling in Loper Bright Enterprises v. Raimondo125 could have implications for drug

manufacturers seeking to challenge CMS’s interpretations of the statute and, in fact, may even

encourage them to bring such suits.126 For example, one firm suggests that a challenge could

emerge over CMS’s interpretation of the statute’s directive to consider a drug’s clinical benefit in

its calculation of an initial offer.127

The extent to which such challenges over CMS’s interpretation of the IRA may be brought,

however, depends largely on how those challenges are pled by the plaintiffs and how the courts

interpret the IRA’s prohibition on administrative and judicial review. As demonstrated in the

AstraZeneca and Novo Nordisk cases, for example, any plaintiff challenging CMS’s interpretation

of the statute will first need to demonstrate that it has actually suffered harm as a result of the

guidance for purposes of satisfying Article III standing. Theoretical arguments that generally

address how a manufacturer might be harmed in the future will likely be insufficient to establish

such standing.128 Assuming that Article III standing is satisfied, a reviewing court may find, as

was the case in Novo Nordisk, that because the specific legal challenge sufficiently relates to

CMS’s selection of the drug for price negotiation and/or its calculation of the MFP, the court

lacks subject matter jurisdiction over the case due to the statute’s preclusion of judicial review for

some of CMS’s determinations under the statute.

124 O’Neill Institute, Health Care Litigation Tracker, GEORGETOWN UNIVERSITY LAW CENTER,

https://litigationtracker.law.georgetown.edu/issues/inflation-reduction-act/ (last visited Nov. 13, 2024).

125 144 S. Ct. 2244 (2024). See CRS Legal Sidebar LSB11189, Supreme Court Overrules Chevron Framework, by

Benjamin M. Barczewski (2024).

126 See, e.g., Meenakshi Datta et al., Potential Implications of Loper Bright for the Healthcare Industry, SIDLEY (July 2,

2024), https://www.sidley.com/en/insights/newsupdates/2024/07/potential-implications-of-loper-bright-for-thehealthcare-industry; see also Jamie Gregorian et al., Loper Bright v. Raimondo: What Life Sciences Companies Should

Consider, DLA PIPER (July 22, 2024), https://www.dlapiper.com/en/insights/publications/2024/07/loper-bright-vraimondo-what-life-sciences-companies-should-consider.

127 Jamie Gregorian et al., Loper Bright v. Raimondo: What Life Sciences Companies Should Consider, DLA PIPER

(July 22, 2024), https://www.dlapiper.com/en/insights/publications/2024/07/loper-bright-v-raimondo-what-lifesciences-companies-should-consider.

128 See Lujan v. Defenders of Wildlife, 504 U.S. 555, 556 (1992) (“Affidavits of members claiming an intent to revisit

project sites at some indefinite future time . . . do not suffice, for they do not demonstrate an ‘imminent’ injury.”).

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Both the AstraZeneca and Novo Nordisk appeals are pending before the Third Circuit, as are other

rulings from district courts in the Janssen Pharms. v. Becerra, Bristol Myers Squibb Co. v.

Becerra,129 and Novartis Pharms. Corp. v. Becerra cases,130 all of which challenged the IRA and

the Medicare Drug Price Negotiation Program on constitutional grounds. The Third Circuit heard

oral arguments in AstraZeneca, Bristol Myers Squibb, and Janssen on October 30, 2024.131

Fifteen Democratic Members of the Senate filed an amicus brief before the Third Circuit in

support of HHS in the AstraZeneca case, arguing that “Congress carefully considered the

competing interests at stake in the Program and struck an appropriate balance.”132 The amicus

brief further insists that the negotiation authority that Congress gave to the Secretary through the

IRA was intended to “help[] the Secretary contain these ballooning [Medicare] costs and preserve

the health of the Medicare Program for future generations of American seniors.”133

The outcome of the litigation may have a substantial impact on how CMS will be able to carry

out the Program and uphold its stated goals of lowering the prices that Medicare pays for selected

drugs.

Author Information

Hannah-Alise Rogers

Legislative Attorney

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan

shared staff to congressional committees and Members of Congress. It operates solely at the behest of and

under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other

than public understanding of information that has been provided by CRS to Members of Congress in

connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not

subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in

its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or

material from a third party, you may need to obtain the permission of the copyright holder if you wish to

copy or otherwise use copyrighted material.

129 On May 6, 2024, Bristol Myers Squibb and Janssen appealed the district court’s summary judgment rulings in their

cases to the U.S. Court of Appeals for the Third Circuit. Notice, Bristol Myers Squibb Co. v. Becerra, No. 24-1820 (3d

Cir. May 6, 2024), ECF No. 1; Notice, Janssen Pharms. v. Becerra, No. 24-1821 (3d Cir. May 6, 2024), ECF No. 1.

The Third Circuit consolidated the appeals. Order, Bristol Myers Squibb Co. & Janssen Pharms. v. Becerra, Nos. 241820, 24-1821 (3d Cir. May 6, 2024), ECF No. 4.

130 Notice, Novartis Pharms. Corp. v. Becerra, No. 24-2968 (3d Cir. Oct. 22, 2024), ECF No. 1.

131 Order, AstraZeneca Pharms LP. v. Becerra, No. 24-1819 (3d Cir. Oct. 8, 2024), ECF No. 74; Order, Bristol Myers

Squibb Co. & Janssen Pharms. v. Becerra, Nos. 24-1820, 24-1821 (3d Cir. May 6, 2024), ECF No. 176. As of the date

of this writing, the court has not yet scheduled oral argument in the Novo Nordisk or Novartis cases.

132 See AstraZeneca Pharms LP. v. Becerra, No. 24-1819 (3d Cir. Sept. 16, 2024), ECF No. 51, at 17.

133 Id. at 18–19.

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