Legal Twist In Drug Price Negotiation: Federal Judge Quits Case Amid Allegations Of Stock Ownership

On Friday, Judge Thomas Rose, serving in the U.S. District Court for the Southern District of Ohio, opted to step down from the case on the same day the Revolving Door Project, a nonprofit organization, revealed his ownership of stocks in Johnson & Johnson JNJ and AstraZeneca Plc AZN.

The Revolving Door Project expressed concerns about Judge Rose's apparent conflict of interest in the pharmaceutical industry and urged him to recuse himself.

Among the ten drugs subject to price negotiations this year, as unveiled by the Biden administration, are J&J's blood thinner, Xarelto, and AstraZeneca's Type 2 diabetes medication, Farxiga.

Judge Rose, appointed during President George W. Bush's tenure, holds stocks valued between $15,000 and $50,000 in J&J and shares in AstraZeneca worth up to $15,000, according to his 2022 financial disclosure statement. 

He also possesses Moderna stock valued between $15,000 and $50,000, as indicated in the filing.

Before his withdrawal, Judge Rose presided over a lawsuit initiated by the U.S. Chamber of Commerce against the Department of Health and Human Services and the Centers for Medicare and Medicaid Services in June. 

The lawsuit sought a court ruling declaring Medicare's drug price negotiation unconstitutional.

This summer, the pharmaceutical industry initiated numerous lawsuits to challenge Medicare's newfound authority. Companies such as Merck & Co MRK, Bristol Myers Squibb & Co BMY, Johnson & Johnson, Boehringer Ingelheim, AstraZeneca, and the pharmaceutical industry lobby group PhRMA filed complaints in various district courts.

Legal experts speculate that pharmaceutical companies are filing these lawsuits in multiple jurisdictions to increase the likelihood of the cases reaching the Supreme Court eventually, CNBC noted.

The U.S. Chamber of Commerce had requested Judge Rose to block the program by October 1, the deadline for drug manufacturers to agree to participate in the negotiations.