A federal judge in Ohio has ruled that the U.S. government’s Medicare health insurance program can begin negotiating prices for certain prescription drugs starting this fall. The decision is a victory for President Joe Biden’s effort to lower healthcare costs. The ruling comes in response to a lawsuit filed by the U.S. Chamber of Commerce, claiming that the program violates the U.S. Constitution and would stifle innovation. However, Judge Michael Newman rejected this argument, stating that drugmakers are not being forced to participate in Medicare and therefore the program does not constitute a constitutional violation.
The program, which is part of the Inflation Reduction Act signed by President Biden last year, aims to save $25 billion annually by 2031 by requiring drugmakers to negotiate prices with the U.S. Centers for Medicare and Medicaid Services. Medicare primarily serves Americans aged 65 and older. Drugmakers whose medicines were selected for the first round of negotiations must agree to begin talks on October 1st, or else face steep penalties or potential exclusion from government healthcare programs. The negotiated prices would take effect in 2026, with a minimum discount of 25% off the list price.
While the ruling allows the program to proceed as planned, the lawsuit will continue, denying a government motion to dismiss it altogether. This ruling is the first among multiple lawsuits filed by drug companies and industry groups challenging the program. The Chamber of Commerce’s lawsuit is the most advanced among them, as other cases are moving at a slower pace and may not be ruled upon until next year. The Biden administration remains committed to reducing healthcare costs for American families, despite challenges from Republicans and the pharmaceutical industry.