Supreme Court Declines to Hear Medicare Drug Price Negotiation Challenge

This week, the Supreme Court rejected appeals from pharmaceutical companies challenging the Medicare drug price negotiation program established by the 2022 Inflation Reduction Act (IRA). The program established, for the first time, the ability of the federal government to directly negotiate prices for drugs offered under Medicare’s Part D prescription drug coverage. The Court’s refusal to consider these manufacturers’ appeals leaves in place a growing number of lower court decisions upholding the law.

Longstanding Complaints and Challenges

Pharmaceutical companies have objected to the IRA’s negotiation program on both policy and constitutional grounds since its inception. They have argued that Congress should address rising drug costs through reforms aimed at insurers and private pharmacy benefit managers, not drug manufacturers. They also argue that the law requiring them to engage in the negotiations in order to have their products eligible for coverage under government programs violates the companies’ free speech and due process rights, among others.

These arguments attacking the program as a whole have been largely unsuccessful, with lower courts noting that though manufacturers claim that the law compels speech by forcing them to accept the “narrative” of negotiated agreement, companies are free to remove their products from government health programs.

Price Negotiation Aims and Impacts

The first round of negotiations involved 10 drugs—with negotiated prices announced in 2024 and prices effective in January 2026—and is expected to be worth 6 billion dollars in savings for the federal government, and 1.5 billion dollars in out-of-pocket costs for people with Medicare. 

Price negotiation was only one component of the IRA’s Part D changes, but it is a significant shift. Implementation is ongoing and can be confusing at the consumer level. Unlike the out-of-pocket cap or restrictions on cost-sharing for insulin, the price negotiation program focuses on the total cost of the drug—what the government, the Part D plan, and beneficiary together pay, rather than isolating the beneficiary’s out of pocket costs. This means that, for some beneficiaries and for some affected drugs, out-of-pocket costs may not change much or at all, while for others, the impacts will be substantial. The details of an enrollee’s plan matter too, as those who pay coinsurance (rather than a flat copayment amount), may see greater savings relative to their plan’s negotiated amount. In future years, additional drugs will be added to the list of negotiated products. 

Looking Ahead

Some manufacturer lawsuits against the negotiation program generally or challenging the inclusion of specific drugs are still pending in lower courts. Challenges to future rulemaking around the standards for drug selection are also likely. For example, the law exempts certain types of drugs from the program, and one manufacturer is challenging the inclusion of their drug by arguing that it fits into such an exemption.

Importantly, however, the program and its cost reductions for the Medicare program, taxpayers, and beneficiaries remains in effect. The Medicare Rights Center will continue to advocate for a strong negotiation program, and for further reforms to improve drug prices and affordability.