A New Jersey federal judge has sided with the federal government in Novo Nordisk’s lawsuit against the Inflation Reduction Act, another in a string of legal victories for the law.
Judge Zahid Quraishi noted that a handful of constitutional challenges at the core of Novo Nordisk’s case were “nearly identical” to arguments made in separate cases brought by Bristol Myers Squibb and Johnson & Johnson. Quraishi tossed those cases in April, ruling that the IRA provisions don’t constitute a physical taking of property or a violation of speech.
The judge stood behind those opinions on Wednesday, saying that Novo’s participation in Medicare negotiations is voluntary. He also rejected additional arguments made by Novo Nordisk that the negotiation process violates the Constitution’s due process clause and separation of powers.
A Novo Nordisk spokesperson said Wednesday that the company is disappointed in the decision and intents to immediately appeal.
“We believe the decision fails to appreciate the serious constitutional problems raised by the Inflation Reduction Act’s unprecedented drug price control provisions,” the spokesperson said.
Novo’s Fiasp and NovoLog insulin products were selected for the first round of Medicare negotiations, which officially end Thursday. CMS said the selected insulin products cost Medicare Part D $2.5 billion from June 2022 to May 2023. Earlier Wednesday, the Danish drugmaker declined to comment on whether it has accepted the government’s final offer for the products. If accepted, CMS plans to announce the new prices on Sept. 1, which will take effect in 2026.
In its lawsuit, Novo claimed the IRA “deprives them of their rights without any procedural protections” and gives CMS “virtually unfettered” price-setting authority. But Quraishi wrote that plaintiffs “cannot plausibly maintain” that they’re being deprived of the physical drugs because “they are not being coerced or compelled to give them up in the first instance.”
As for the separation of power claims, Quraishi said a decision in Novo’s favor “would disturb nearly century-long precedent upholding very broad delegations to agencies to regulate ‘in the public interest’ and to ‘set fair and equitable’ prices and ‘just and reasonable’ rates.”
The federal government has won several similar lawsuits brought by Bristol Myers Squibb, J&J, AstraZeneca, Boehringer Ingelheim and a handful of organizations, including the DC-based industry trade group PhRMA. A decision has not yet been filed by Quraishi in another case brought by Novartis, and Merck is still waiting on a decision on its case in Washington, DC, despite being the first drugmaker to file a lawsuit.
Editor’s Note: This story has been updated to include comment from Novo Nordisk.