The U.S. Supreme Court has declined to hear petitions from six major drugmakers challenging the Medicare Drug Price Negotiation Program, leaving in place lower court rulings that upheld the program and effectively closing off the industry’s best remaining path to dismantling it through the courts.
The justices refused to take up separate appeals brought by AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Janssen, Novartis and Novo Nordisk, and gave no reason for their decision.
The decision is the latest blow to an industrywide legal campaign that began when President Joe Biden signed the Inflation Reduction Act into law in August 2022. PhRMA President and CEO Stephen Ubl said at the time the industry would “explore every opportunity to mitigate the harmful impacts from the unprecedented government price setting system being put in place.”
Those efforts have now run out of road at the Supreme Court level, at least on the constitutional questions raised in these cases.
But the Trump administration’s posture on the program wasn’t a given. When President Donald Trump took office, the Department of Justice faced an open question of whether to continue defending it in court, with some industry leaders observing that opting out could cause further delays or complications. The administration answered quickly: in a Novartis lawsuit filed Feb. 21, 2025, the DOJ argued that participation in Medicare and Medicaid is voluntary and companies are free to walk away from the program.
But even as it held that line in court, Congress moved to limit the program’s scope. The One Big Beautiful Bill Act, signed by President Trump in July 2025, delayed negotiations for some of the best-selling drugs in the world — including Merck’s Keytruda and Bristol Myers Squibb’s Opdivo and Yervoy — by expanding orphan drug exemptions. Johnson & Johnson’s Darzalex was excluded from negotiations entirely, and the Congressional Budget Office estimated the changes would avert nearly $5 billion in projected federal savings.
Where the program stands
When Medicare Part D was created in 2003, it was banned from directly negotiating with pharmaceutical companies. The IRA has since ended that 19-year prohibition, and the program has moved through three negotiation cycles.
The first round produced price reductions ranging from 38% to 79% off list price for 10 drugs covering conditions including Type 2 diabetes, blood clots and heart failure, with those prices taking effect Jan. 1, 2026. The second cycle added 15 drugs — including Ozempic, Wegovy, Xtandi and Vraylar — with negotiated prices set to take effect in 2027.
A third round is now underway. CMS will send initial price offers by June 1, with final agreements due by Nov. 1, and negotiated prices set to take effect in 2028. That cycle will also mark the first time Medicare Part B drugs — typically administered in hospital settings, such as chemotherapy or anesthesia — are included in negotiations.
What it means for health systems
For hospital pharmacy and supply chain leaders, the May 18 ruling removes a major variable that had hung over IRA implementation planning. The program is no longer a litigation question — it’s an operational reality that will only expand.
But health systems have been preparing, and absorbing pressure, for some time. Pharmacy leaders identified Medicare drug price negotiations and IRA implementation as among their biggest headwinds entering 2026, with Geisinger’s Seth Gazes noting that negotiations for 2027 IRA-designated drugs require planning across specialty, retail and mail-order revenue streams.
Danielle Sestito, PharmD, assistant vice president of pharmacy services at Northwell Health, added the “sheer volume” of legislative and policy proposals will profoundly affect both practice and financial integrity — and that navigating this environment is a strategic imperative, not just a compliance exercise.
Operationally, the MFP rebate process has proven difficult to execute at scale. ASHP, which represents 60,000 U.S. pharmacists and pharmacy technicians, warned CMS in January 2025 that its proposed implementation framework would increase drug purchasing costs and threaten the financial stability of hospitals, pharmacies and other community providers — even as the organization expressed support for the underlying goals of IRA price negotiations. An NCPA survey found 93.2% of independent pharmacies would not participate in the program or were considering not doing so due to expected financial losses.
Meanwhile, manufacturers were already adjusting before the first prices took effect. A December 2025 Vizient analysis found that after the IRA became law, 90% of 62 Medicare Part B products saw accelerated price increases, with some rising as fast as 13.3% annually.
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