The Supreme Court declined to hear challenges from six pharmaceutical manufacturers against Medicare's drug price negotiation authority, leaving intact a controversial program that has already completed two negotiation cycles spanning 25 drugs. The court gave no reason for rejecting the petitions, effectively ending what industry observers called the "last frontier" for constitutional challenges to the Inflation Reduction Act's 2022 provisions.
Andrew Twinamatsiko, director of the Center for Health Policy and the Law at Georgetown Law's O'Neill Institute, said the Supreme Court's decision represents "a strong signal from the Supreme Court that constitutional arguments are not going to cut it" on the topic. The pharmaceutical industry has raised claims ranging from free speech violations to due process infringements, but so far no court has ruled against the Department of Health and Human Services' defense of the program under either the Biden or Trump administrations.
Program Structure and Legal Defense
A former congressional staffer who helped write the Medicare drug negotiation law, granted anonymity to discuss the Supreme Court denial, explained that Democrats structured the program to make drugmakers' participation technically voluntary, even though withdrawing from Medicare and Medicaid would carry substantial consequences. The former aide said the statute includes "several steps in the process that allows manufacturers to exit the program," adding that "the drug price negotiation is voluntary for them, and that's what is giving the courts the ability to rule that the law is constitutional."
PhRMA spokesperson Sarah Ryan said the industry's lawsuit remains ongoing, stating: "Our lawsuit is ongoing, and we continue to believe the IRA, which establishes government price controls for medicines, is unconstitutional." Government lawyers pointed out these claims in Monday filings to lower courts considering two outstanding suits. While no Republican lawmakers voted to support the Inflation Reduction Act, the Trump administration has continued to implement Medicare drug price talks even as Trump has focused on pursuing his most-favored-nation drug pricing effort.
Estimated Savings and Future Expansion
CMS estimated that the initial round of Medicare price talks on the first set of 10 drugs would have saved roughly $6 billion in 2026 had the prices been applied in the third year. The Trump administration estimated last year that the second round, which impacted 15 medicines, would save $12 billion in 2027 were the prices applied in the second year. Earlier this year, the administration announced the third set of 15 new medicines selected for negotiations, a process that will conclude by Nov. 1. Some of the negotiated medicines will later be removed from the program once they face competition from generic or biosimilar products.
Senate Finance Committee ranking member Ron Wyden, D-Ore., said the Supreme Court's move leaves the Inflation Reduction Act program "on solid ground." He said Democrats are now going to look for "every opportunity to add to the negotiation list." Wyden also said, "A broken clock can be right a couple of times," and added, "I believe this law is going to stand up, and that's what has been reflected by the court's decision."
Narrower Legal Challenges Ahead
Program proponents now expect drugmakers to focus future challenges on narrower issues, such as why Medicare chose a certain product or what counts as a drug eligible for inclusion. AbbVie, for example, claims the government illegally selected Botox for negotiations because it is derived from human plasma, a product type the law expressly shields from inclusion. The White House is reviewing a proposed rule from CMS to formalize its program standards beginning with prices that will go into effect in the third year from now. Drugmakers could challenge the eventual final rule.
New Jersey Rep. Frank Pallone, the top House Energy and Commerce Committee Democrat, said in a statement, "Now it's time to build on the program by negotiating the prices on more drugs sooner and lowering prices for all Americans." Larry Levitt, executive vice president for health policy at the research group KFF, said industry would "no doubt" fight any effort in Congress to apply the program to more drugs at a quicker cadence. He said Medicare can choose up to 20 drugs for negotiations annually beginning in the third year from now. Levitt added, "What I think would raise potentially bigger legal and political fights is trying to extend drug price negotiation to the commercial market." He said, "That would just be a whole different kettle of fish."
Nicholas Bagley, an administrative and health law expert at the University of Michigan Law School, said the Supreme Court had no reason to intervene because the lower courts were aligned in upholding the program's constitutional legitimacy. Bagley said, "The abstract claim that this is somehow very consequential for the drug industry — that by itself isn't going to be enough." He added that what may have moved the needle for the court would have been if the Trump administration had not taken over the program's defense from the Biden-era Justice Department and instead asked the justices to weigh in. "But," he said, "it didn't."
Why This Matters:
The Supreme Court's decision to leave Medicare drug price negotiations intact preserves a program that fundamentally alters the relationship between government and pharmaceutical innovation. While the estimated savings of $6 billion and $12 billion from the first two rounds appear substantial, they represent government-mandated price controls on products developed through private capital investment and risk-taking. The pharmaceutical industry's concern centers on whether artificially suppressed prices will reduce incentives for research and development of breakthrough therapies. Democrats' stated intention to expand the negotiation list and potentially extend controls to the commercial market raises questions about the future of pharmaceutical innovation and whether government price-setting mechanisms will ultimately reduce the availability of new treatments. The Trump administration's continuation of the program despite Republican opposition to the Inflation Reduction Act suggests the political difficulty of unwinding entitlement expansions once established, even when concerns about market distortion and innovation remain unresolved.