By: Jimmie L. Bullock
Background
On May 18, 2026, the Supreme Court declined to review six pharmaceutical manufacturers’ challenges to the Medicare Drug Price Negotiation Program (MDPNP). For nearly three years, manufacturers had sought to stop the program before its first negotiated prices took effect, arguing that it violated the First Amendment, the Takings Clause, procedural due process, the Eighth Amendment’s prohibition on excessive fines, and the nondelegation doctrine. Courts consistently rejected those claims, producing at least eighteen decisions unfavorable to the manufacturers.
The certiorari denials resolve neither the merits of those claims nor their application in future cases. As a practical matter, however, they substantially reduce the likelihood that the program itself will be invalidated through the theories litigated to date. The legal fight is not over. Its object has changed.
The Program and the Cost of a “Voluntary” Choice
When Congress created Medicare Part D in 2003, it barred the Centers for Medicare & Medicaid Services (CMS) from negotiating prescription-drug prices. The Inflation Reduction Act of 2022 reversed that policy in part, directing CMS to select certain high-expenditure drugs without generic or biosimilar competition and negotiate a “maximum fair price” with their manufacturers. Negotiated prices for the first ten drugs took effect on January 1, 2026; fifteen more will follow in 2027, and CMS has selected another fifteen, including the first Part B drugs, for 2028. For beneficiaries whose cost sharing depends on a drug’s price, lower negotiated prices can mean lower out-of-pocket costs.
Participation in the program is formally voluntary. A manufacturer that declines to negotiate, however, must either pay an escalating excise tax or withdraw all its products from Medicare and Medicaid coverage agreements. Manufacturers analogize that choice to the unconstitutionally coercive “gun to the head” ultimatum identified in NFIB v. Sebelius.
The Second and Third Circuits rejected that analogy, reasoning that manufacturers have no protected entitlement to sell drugs to the government at prices of their choosing and Sebelius’s federalism concerns do not extend to private manufacturers. After the Supreme Court declines, that coercion theory appears to have reached a doctrinal dead end.
The Second Wave
The next wave of cases asks whether CMS brought particular drugs within the program through methodologies the statute does not authorize.
Teva Pharmaceuticals challenges CMS’s grouping of Austedo and its extended-release analog, approved under separate FDA applications, as a “qualifying single-source drug.” It also contests CMS’s “bona fide marketing” standard for deciding when an approved generic had genuinely entered the market. The D.D.C. upheld the aggregation rule in November 2025 and found the generic-marketing challenge unripe. The D.C. Circuit heard oral argument on Teva’s appeal on May 5, 2026.
AstraZeneca challenges CMS’s rule grouping drugs that share an active moiety—the chemically active component responsible for a drug’s effect—and assigning the group the earliest FDA approval date among them, which accelerates MDPNP eligibility for later-approved formulations. AstraZeneca’s earlier APA claim failed for lack of concrete injury; the new action, pending in the District of Maryland, presents the statutory question the Third Circuit previously declined to reach.
AbbVie argues that Botox falls within the IRA’s exclusion for plasma-derived biological products. The legal question is whether the plasma-derived exclusion requires that a product’s therapeutic effect derive from plasma, or whether the presence of any plasma-derived ingredient suffices. Botox’s active ingredient is botulinum toxin type A, whereas human serum albumin from donated plasma is merely a stabilizing excipient. CMS selected Botox for the 2028 cycle, and AbbVie moved for summary judgment in April 2026.
The Reviewability Problem
The MDPNP, through § 1320f-7, bars judicial review of several specified determinations, creating a threshold problem for the second-wave suits. The government characterizes these suits as indirect attempts to obtain review of decisions Congress expressly insulated. Manufacturers separate the unreviewable selection result from the allegedly unlawful rule that produced it. They contend they are not challenging why CMS selected a particular drug, but the legality of generally applicable policies defining which products qualify for selection.
The D.D.C. accepted that distinction in Teva, consistent with the presumption that statutory preclusion bars are construed narrowly; it held the IRA barred review of individual drug determinations but not facial APA challenges to CMS’s aggregation and generic-marketing policies. AstraZeneca and AbbVie will test the distinction’s limits, and the test exposes its weakness. Neither company can establish standing without first suffering the very selection decision the IRA shields from review, so their facial challenges to CMS’s methodology cannot help but carry an individual determination along with them.
What Loper Bright Changes
If a claim clears the reviewability barrier, Loper Bright Enterprises v. Raimondo requires courts to determine independently the best reading of the IRA provisions governing drug eligibility and aggregation. When Congress enacted the MDPNP in 2022, Chevron still permitted courts to defer to reasonable agency interpretations of ambiguous statutory language; that deference is no longer available.
Independent review gives manufacturers a judicial determination, not necessarily a favorable one. Teva illustrates the point: the D.D.C. interpreted the IRA for itself and still concluded that CMS had the better reading of the aggregation provisions. Manufacturers spent three years litigating to take the question away from the agency; Loper Bright handed it to a court that read the statute the same way CMS did.
What’s at Stake
CMS estimated that, had the first ten negotiated prices applied in 2023, they would have reduced Medicare’s net drug spending by approximately $6 billion. CMS separately projects roughly $1.5 billion in beneficiary out-of-pocket savings for 2026. Excluding a high-expenditure drug, delaying its eligibility, or invalidating a selection methodology could therefore affect federal spending and require CMS to revisit similarly situated products.
Looking Forward
On June 12, 2026, CMS proposed moving much of the MDPNP’s annual guidance into notice-and-comment rulemaking beginning in 2029, trading the agency’s current freedom to act through guidance for fuller administrative records. That trade cuts both ways. A reasoned record is harder to displace on statutory merits than the current informal guidance, but a record that inadequately addresses manufacturers’ aggregation or exclusion arguments could support invalidation, under the APA’s arbitrary and capricious standard, without requiring a court to find that CMS misread the statute.
The first wave asked whether the government could negotiate at all. The second asks what negotiation reaches. The Supreme Court’s certiorari denials left the MDPNP standing but did not settle its boundaries. The next cases, if they reach the merits, will define those boundaries one term, one methodology, and one drug at a time.
Sources:
26 U.S.C. § 5000D(c)–(e).
42 U.S.C. § 1320e-3.
42 U.S.C. § 1320f-7(1)-(3).
42 U.S.C. § 1395w-111(i).
AbbVie Inc. v. Department of Health & Human Services, No. 1:26-cv-00431-CJN, ECF No. 1 (D.D.C. Feb. 11, 2026); ECF No. 25 (Apr. 28, 2026).
Andrew Chung, U.S. Supreme Court Rebuffs Pharma Challenge to Biden-Era Drug Price Law, Reuters (May 18, 2026), https://www.reuters.com/world/us-supreme-court-rebuffs-pharma-challenge-biden-era-drug-price-2026-05-18/.
AstraZeneca Pharmaceuticals LP v. Kennedy, No. 1:25-cv-04212-MJM, ECF No. 1 (D. Md. Dec. 19, 2025).
AstraZeneca Pharmaceuticals LP v. Secretary, U.S. Department of Health & Human Services, 137 F.4th 116 (3d Cir. 2025).
Boehringer Ingelheim Pharmaceuticals, Inc. v. Department of Health & Human Services, 150 F.4th 76 (2d Cir. 2025).
Brendan Pierson, CMS Proposes Rule for Medicare Drug Price Negotiations from 2029, Reuters (June 12, 2026), https://www.reuters.com/legal/litigation/cms-proposes-rule-medicare-drug-price-negotiations-2029-2026-06-12/.
Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842–43 (1984).
Ctrs. for Medicare & Medicaid Servs., CMS Announces Selection of Drugs for Third Cycle of Medicare Drug Price Negotiation Program, Including First-Ever Part B Drugs (Jan. 27, 2026), https://www.cms.gov/newsroom/press-releases/cms-announces-selection-drugs-third-cycle-medicare-drug-price-negotiation-program-including-first.
Ctrs. for Medicare & Medicaid Servs., Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026 (Aug. 15, 2024), https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026.
Hannah-Alise Rogers, Cong. Rsch. Serv., R47682, Constitutional Challenges to the Medicare Drug Price Negotiation Program (updated 2026), https://www.congress.gov/crs-product/R47682.
Inflation Reduction Act of 2022, Pub. L. No. 117-169, § 11001, 136 Stat. 1818, 1833–61 (codified at 42 U.S.C. §§ 1320f to 1320f-7).
Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 412–13 (2024).
NFIB v. Sebelius, 567 U.S. 519, 581–82 (2012).
Supreme Court of the United States, Order List (May 18, 2026), https://www.supremecourt.gov/orders/courtorders/051826zor_h315.pdf.
Teva Pharmaceuticals USA, Inc. v. Kennedy, No. 1:25-cv-00113-SLS, ECF No. 46, Memorandum Opinion at 12–30 (D.D.C. Nov. 20, 2025).
Teva Pharmaceuticals USA, Inc. v. Kennedy, No. 25-5425 (D.C. Cir. argued May 5, 2026).