In their attempts to challenge the Medicare drug price negotiation program, introduced by former President Joe Biden under the Inflation Reduction Act (IRA), biopharma companies have been largely shut out in federal courts.
On Tuesday, however, Teva Pharmaceuticals gained a partial win as the U.S. Court of Appeals for Washington, D.C. sent (PDF) a previous ruling back to the District Court for further review. It concerns Teva’s challenge to the requirement by the Centers for Medicare & Medicaid Services (CMS) that a generic drug be genuinely marketed before its brand-name reference product is excluded from negotiation.
The appeals court did not decide on the legality of the CMS’s “bona fide marketing” standard. It only determined that it should be considered by the lower court.
“The district court never addressed whether CMS’s standard comports with the IRA, and we leave that question for it to consider in the first instance,” Circuit Judge J. Michelle Childs wrote.
Teva argues that the government uses a subjective “bona fide marketing” standard when determining whether a generic or biosimilar drug has entered the market and thus impacts whether the reference product is eligible for price negotiations.
The appeals court did reject another challenge brought by Teva. The court upheld the expected decision by CMS to classify the company’s Huntington’s disease and tardive dyskinesia drug Austedo and its extended-release version, Austedo XR, as a single drug.
Teva contended that CMS devised a “made-up definition” of what constitutes a “qualifying single-source drug” and argued that its product should not be included in price negotiations since Austedo XR did not meet the seven-year marketing standard the CMS has set for eligibility.
Teva’s Austedo attempt went the way of several other challenges by pharma giants against the IRA. In May, the U.S. Supreme Court declined to hear cases brought by AstraZeneca, Johnson & Johnson, Bristol Myers Squibb, Novo Nordisk, Novartis and Boehringer Ingelheim, which had been rejected by lower courts.
When Teva brought its lawsuit in January of this year, it leaned on its unique position in the industry—and among those bringing cases against the government—as a producer of both innovative and copycat drugs.
Patients for Affordable Drugs CEO Merith Basey called Tuesday’s Austedo decision a “major victory for patients.”
“The court rejected Teva’s core arguments and upheld Medicare’s ability to negotiate a lower price for these drugs,” Basey added. “Today’s ruling helps protect the hard-won progress patients across the country fought for in the face of an industry determined to preserve its unchecked pricing power.”
