Novo Nordisk Files Lawsuit Challenging Medicare Drug Price Talks

Novo Nordisk became the latest pharmaceutical company to file a lawsuit against the Biden administration’s drug price negotiation program.

The manufacturer filed the lawsuit Friday in US District Court for the District of New Jersey, saying the implementation of the the drug pricing provisions of the Inflation Reduction Act violate both the Fifth and First Amendments. Novo Nordisk’s drugs—selected as among the first 10 up for price talks with Medicare—include the insulin products Fiasp and NovoLog.

The challenge comes as deadlines for the company and other drugmakers to agree to participate in the talks with the Medicare agency are imminent.

Drug manufacturers subject to the first round of negotiations must sign agreements by the end of Sunday to enter the price talks, or risk financial penalties under the law. By Monday, the companies must submit manufacturer-specific data to the Centers for Medicare & Medicaid Services to help the agency make an initial offer on a product’s maximum fair price. The negotiated prices wouldn’t go into effect until 2026.

Novo Nordisk argues the CMS violated the law by selecting “more than 10 individual drugs for price controls by grouping together products with the same active ingredient or moiety.”

The company said the CMS “unlawfully deemed six different Novo products a single ‘biologic product’ and subjected all of them to price controls, even though the products do not satisfy the statutory criteria.”

“These medications are different drugs with different formulations and different requirements for approval, each separately licensed by the US Food and Drug Administration,” the company said in a statement.

“Each medicine had its own development timeline, clinical trial program, and production cost. By treating these products as one, CMS is defying the IRA’s clear and express mandates and setting up conflicts with the FDA’s longstanding regulatory definitions and programs,” the company added.

The drugmaker’s complaint requests the court declare the IRA’s drug price control program violates the Constitution’s separation of powers and Due Process Clause of the Fifth Amendment, among other requests.

Novo Nordisk will still comply with the negotiation agreement with Medicare, despite filing a lawsuit.

“While we do not believe the implementation of drug price negotiation provisions of the IRA is the right approach to help ensure patients living with diabetes can afford our insulins, we will comply with the law,” the company said Sunday in an email to Bloomberg Law.

Novo Nordisk joins other drugmakers that have challenged Medicare’s drug price negotiation program but publicly agreed to enter the price talks.

Drugmakers choosing not to negotiate or face the IRA’s hefty financial penalty must allow “bona fide” competition from a generic or biosimilar product, thus exempting the drugmaker from the program, according to CMS guidance.

The other option is to withdraw all their products from Medicare and other federal health programs. This means a drugmaker would not only lose access to the more than 65 million Americans covered by Medicare, but also the roughly 87 million enrolled in Medicaid.

The case is Novo Nordisk Inc. v. Becerra, N.J. Dist. Ct., No. 3:23-cv-20814, complaint filed 9/29/23.