By Fineline Cube The U.S. Court of Appeals for the Third Circuit ruled against Merck & Co., Inc. (MSD; NYSE: MRK), rejecting the drugmaker’s claim that Medicare drug price negotiations violate the First and Fifth Amendments. The decision lands just five days after a federal court in Maryland dismissed an AstraZeneca lawsuit alleging improper drug grouping for negotiation eligibility — extending a string of judicial defeats for pharmaceutical companies challenging the program.
Ruling Summary
| Item | Detail |
|---|---|
| Court | U.S. Court of Appeals for the Third Circuit |
| Plaintiff | Merck & Co., Inc. (MSD; NYSE: MRK) |
| Claim | Medicare drug price negotiations violate First and Fifth Amendments |
| Ruling | Rejected |
| Ruling Date | 24 Aug 2026 |
| Related Ruling | 19 Aug 2026 – Federal court in Maryland dismissed AstraZeneca’s drug‑grouping challenge |
A Pattern of Legal Defeats
- Inflation Reduction Act (IRA) Origins: The Medicare drug price negotiation program was introduced under the IRA in 2022, and drugmakers have mounted repeated constitutional and procedural challenges since.
- Supreme Court Declined to Intervene: In May, the U.S. Supreme Court declined to hear cases brought by Johnson & Johnson, Bristol‑Myers Squibb, Novo Nordisk, Novartis, Boehringer Ingelheim and a previous AstraZeneca lawsuit, after lower courts had rejected all challenges.
- Cumulative Effect: The latest Third Circuit loss adds to an unbroken series of defeats for the industry’s attempts to block or reshape the negotiation framework through the courts.
Teva Secures Rare Partial Win
- Generic Drug Exclusion Case: Last week, Teva secured a rare partial win, with a federal appeals court sending a generic drug exclusion case back to District Court for further review.
- Austedo Classification Rejected: However, the court rejected Teva’s separate challenge regarding the classification of its Huntington’s disease drugs Austedo and Austedo XR as a single product — a determination that affects how negotiation eligibility is assessed.
Industry Implications & Outlook
- Legal Avenues Narrowing: With the Supreme Court already declining review and the Third Circuit now affirming the program’s constitutionality, pharmaceutical companies have few remaining judicial paths to overturn IRA‑based Medicare negotiations.
- Pricing Pressure Persists: The rulings cement a structural headwind on pricing for blockbuster drugs that reach negotiation eligibility, reinforcing the importance of pipeline renewal and lifecycle management strategies.
- Focus Shifts to Policy: With courts largely out of the picture, industry attention is expected to pivot toward legislative and administrative efforts to soften the program’s implementation details.
Forward‑Looking Statements
This brief contains forward‑looking statements regarding the implications of the Third Circuit ruling and related litigation for pharmaceutical pricing and company financial outlooks. Actual outcomes may differ due to risks including further appeals, legislative developments and administrative decisions.-Fineline Info & Tech