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Earlier this week, the 3rd US Circuit Court of Appeals in Philadelphia unanimously rejected Novo Nordisk’s arguments against the Inflation Reduction Act (IRA) of 2022, particularly those that give the US government’s Medicare plan—which covers 66 million people—the authority to negotiate lower drug prices.
According to a Reuters report,1 Novo is looking into ways to appeal the decision. Six of the pharma company’s insulin products were selected to undergo price negotiations with Medicare, with the first round of new drug prices2 to take effect in 2026.
These include:
- Fiasp
- Fiasp FlexTouch
- Fiasp PenFill
- NovoLog
- NovoLog FlexPen,
- NovoLog PenFill
The Denmark-based drugmaker is not the first pharma company to face a similar result, however. Court records1 indicate that in May, the 3rd Circuit upheld a lower court’s decision rejecting AstraZeneca’s challenge, ruling that the company does not have a constitutional right to sell its drugs to the government at prices above what the government is willing to pay. By September, the court had issued similar rulings in cases filed by Bristol Myers Squibb and Novartis.
The IRA dates back to the Biden administration, and prohibits the courts from reviewing these aforementioned drugs. It also implements new tax provisions, establishes Medicare drug rebates tied to inflation, launches a drug price negotiation program, and caps out-of-pocket prescription drug expenses for Medicare beneficiaries at $2,000.3
Political context and policy pressure
The heat had been applied to drug manufacturers starting this summer, when President Trump issued letters to 17 of the largest pharmaceutical companies via his Truth Social account, expressing urgency for making changes along the drug pricing front.4
These letters stem from an executive order (EO) he enacted in May that essentially proclaimed that pharma companies need to treat the United States as a most-favored nation (MFN) as it pertains to drug pricing. The EO notes that US drug prices need to be less than or equal to the drug’s lowest price in other nations, as a way of establishing fairness.
Fast facts: Novo Nordisk IRA Court Ruling
- Court decision: The 3rd US Circuit Court of Appeals upheld Medicare’s authority to negotiate drug prices under the Inflation Reduction Act (IRA).
- Company involved: Novo Nordisk, which plans to appeal the ruling.
- Drugs affected: Six insulin products, including Fiasp and NovoLog lines, are part of the first Medicare negotiation round taking effect in 2026.
- Precedent: Similar challenges from AstraZeneca, Bristol Myers Squibb, and Novartis were also dismissed earlier this year.
The letters—which all have the same wording—explain what he looks to accomplish from the MFN order while providing a timeline for the next 60 days (Sept. 29) that they have to comply.
This includes extending MFN pricing to Medicaid; guaranteeing MFN pricing for newly-launched drugs; returning increased revenues abroad to American patients and taxpayers; and providing for direct purchasing at MFN pricing.
“Make no mistake: a collaborative effort towards achieving global pricing parity would be the most effective path for companies, the government, and American patient,” wrote Trump. “But if you refuse to step up, we will deploy every tool in our arsenal to protect American families from continued drug pricing practices.”
Pharma tariffs have also been top of mind for the US president—as a way to encourage the reshoring of manufacturing—most recently featuring a 100% import tax on any branded or patented drug unless drug producers break ground on new manufacturing plants.5
However, there have also been reports saying the US president may not enact the triple-digit pharma tariffs after all.6 Rather the tariffs could potentially use as negotiating tactic with pharma companies while they work out deals with the government to lower drug costs.
For one, Pfizer partnered with the White House to announce an agreement with the federal government aimed at lowering drug prices in accordance with Trump’s MFN (most-favored nation) executive order.6 As part of the announcement, it was also disclosed that Pfizer’s products will be exempt from tariffs for the next three years, contingent upon the company’s continued compliance with the agreement’s terms.
References
1. Jones DN. US Court Rejects Novo Nordisk’s Challenge to Medicare Drug Pricing Plan. Reuters. October 6, 2025. Accessed October 9, 2025. https://www.reuters.com/business/healthcare-pharmaceuticals/us-court-rejects-novo-nordisks-challenge-medicare-drug-pricing-plan-2025-10-06/
2. Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026. CMS.gov. August 15, 2024. Accessed October 9, 2025. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026
3. Effects of the Inflation Reduction Act on the Pharmaceutical Industry. KPMG. October 6, 2025. Accessed October 9, 2025. https://kpmg.com/us/en/media/news/ira-pharmaceutical-2023.html
4. Hollan M. President Trump Issues Letters to 17 Major Pharma Companies Demanding Action on Most-Favored-Nation Order. Pharmaceutical Executive. July 31, 2025. Accessed October 9, 2025. https://www.reuters.com/business/healthcare-pharmaceuticals/us-court-rejects-novo-nordisks-challenge-medicare-drug-pricing-plan-2025-10-06/
5. Saraceno N. Trump Announces 100% Tariff on Branded Drugs Unless Pharma Builds US Plants. Pharmaceutical Commerce. September 26, 2025. Accessed October 9, 2025. https://www.pharmaceuticalcommerce.com/view/trump-100-percent-tariff-branded-drugs
6. Hollan M. Trump Pauses Plans to Impose 100% Tariffs on Pharma: Report. Pharmaceutical Executive. October 2, 2025. Accessed October 9, 2025. https://www.pharmexec.com/view/trump-pauses-plans-impose-100-tariffs-report