AstraZeneca and drug pricing

AstraZeneca Contests Drug Pricing Laws in Legal Battle

AstraZeneca (AZN) has emerged as the sixth pharmaceutical company and the foremost international entity to enter the legal fray against Xavier Becerra, the US Health Secretary, CMS Administrator Chiquita Brooks-LaSure, and their endeavors in Medicare drug pricing negotiations. AstraZeneca’s legal move centers on claims that specific clauses within the Inflation Reduction Act, which granted the Centers for Medicare & Medicaid Services (CMS) authority to engage in drug price negotiations, run afoul of the Constitution’s Fifth Amendment.


The multinational pharmaceutical corporation alleges that the Biden Administration’s actions, as facilitated by the Inflation Reduction Act, constitute a violation of the Fifth Amendment due to the perceived unconstitutional seizure of its assets. At the heart of AstraZeneca’s argument is the assertion that the Administration’s strategy, involving a restricted timeframe for negotiations and a lack of post-negotiation judicial review, echoes an infringement on the company’s rights, akin to the principles outlined in the earlier Orphan Drug Act.


In an interview, AstraZeneca’s Executive Vice President of Oncology, David Fredrickson, expounded on the rationale behind the legal action. He elucidated, “Our decision came after meticulous consideration, having willingly and extensively participated in the rule-making process alongside CMS. Our conviction stems from the belief that the administrative rollout of the Inflation Reduction Act clashes with the strides made in providing novel treatments to patients grappling with rare diseases and cancer.”


The Inflation Reduction Act primarily targets drugs facing competition from generics, biosimilars, or those designated as orphan drugs for the treatment of specific diseases. The legislation establishes varying exclusivity periods, extending nine years for small molecule drugs and thirteen years for intricate biologics, before initiating negotiations. Typically, most drugs possess patent protections for a span of twenty years, which could be shortened due to developmental phases.


Fredrickson underscored, “Our focus lies in areas where research and development efforts are scarce. This hinges on incentivizing pioneering enterprises armed with groundbreaking science to extend their innovations to underserved populations grappling with pronounced unmet medical needs.”


AstraZeneca also raises concerns about the lack of a predetermined baseline for initiating price discussions, which potentially paves the way for unreasonably reduced drug pricing. The company’s legal submission posits, “For a substantial number of drugs, a pricing floor is absent. Becerra retains the authority to decree that Medicare’s payment for a specific drug should stand at a mere cent, leaving manufacturers with the onerous choice of adhering to that rate or facing substantial liabilities.”


The impending legal tussle between AstraZeneca and the federal government is projected to persist well into the summer season. Anticipations loom large over the participation of several other pharmaceutical firms in this discord. The outcome hinges on the capacity of the Biden Administration and the pharmaceutical sector to find middle ground and establish mutually beneficial terms moving forward.


Source: Yahoo Finance


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