AstraZeneca loses appeal over Medicare pricing reforms

UK pharma major AstraZeneca (LSE: AZN) has suffered a setback in its legal fight to block the US government's efforts to lower prescription drug prices, after a federal appeals court dismissed its challenge to Medicare’s negotiation powers.

The decision, handed down Thursday by the Third Circuit Court of Appeals, marks the first time an appellate court has ruled on the substance of the Biden administration’s drug pricing policy. The panel of judges upheld a 2024 ruling that rejected AstraZeneca’s arguments, finding the company had not shown it was directly harmed by the reforms or that its constitutional rights were violated.

AstraZeneca brought the case after the American medicines regulator selected Farxiga (dapagliflozin) — one of the company’s best-selling diabetes and heart failure drugs — for inclusion in the first round of Medicare price talks under the Inflation Reduction Act. These negotiations are scheduled to take effect in 2026.