Novo Disputes US Pick of Insulin for Drug Talks at Third Circuit

Novo Nordisk A/S is arguing before the Third Circuit that the Medicare agency unlawfully selected six of its insulin products and aggregated them as one under a government drug price negotiation program.

The Centers for Medicare & Medicaid Services rewrote the Inflation Reduction Act’s “express numerical limits” when it imposed price controls on six products and grouped them as one under the Medicare Drug Price Negotiation Program, Novo wrote Tuesday in its opening brief to the US Court of Appeals for the Third Circuit.

At issue before the court is whether the CMS violated the IRA when it imposed price controls on Novo’s products and set the price for more than “10 negotiation-eligible drug or biologic products.” The manufacturer claims that the CMS violated the statute’s “strict 10-product limit.” Its drugs underwent different clinical trials with different patient populations and obtained FDA approval at different times, Novo argued.

The negotiation plan was created to slash the costs of some of the most widely used and expensive drugs covered under Medicare Part D. The government on Aug. 15 unveiled the negotiated prices after months of back-and-forth talks between the CMS and manufacturers.

A lower federal court in July rejected Novo’s arguments alleging the program violates the First Amendment compelled speech doctrine, Fifth Amendment due process clause, separation of powers doctrine, and the Administrative Procedure Act.

“This case is different,” Novo wrote. “It presents unique questions of statutory interpretation, focusing on actions taken by CMS to implement and apply the statute. Those actions violate the statute’s plain text, conflict with decades of settled precedent, and confirm that CMS’s price control regime is unconstitutional.”

Novo’s argument against the agency’s decision to group its products as one “merely because they contain the same ‘active ingredient’” could come up again in the next negotiation cycle.

Drug pricing experts predict that Novo’s blockbuster weight loss and diabetes drugs—Ozempic, Wegovy, and Rybelsus—could be targeted in the next negotiation round. The drugs all share the same active ingredient, semaglutide.

The Congressional Budget Office in March also predicted that Novo’s weight loss drugs could be selected for price cuts in the next few years.

Novo’s CEO Lars Fruergaard Jorgensen in September before a US Senate hearing said within a year, Ozempic will be eligible for price negotiations.

The drugmaker asks the court to vacate the government’s final actions, strike down the negotiation program, and remand the case to the district court to grant Novo’s requests for declaratory and injunctive relief.

King & Spalding represents Novo Nordisk.

The US Department of Justice represents the CMS.

The case is Novo Nordisk Inc. v. Secretary US Dept & Health and Human Services, 3d Cir., No. 24-02510, opening brief filed 10/15/24.