Judge withdraws from Medicare drug price case after stock ownership is revealed

A federal judge on Friday withdrew from a case that could block Medicare from negotiating over drug prices, just hours after a watchdog group revealed his ownership of stock in two pharmaceutical companies that would be directly impacted by the new program.

Judge Thomas M. Rose of the U.S. District Court for the Southern District of Ohio withdrew from the case on the same day that the Revolving Door Project, a nonprofit, sent him a letter raising questions about his ownership of stock in Johnson & Johnson and AstraZeneca.

“Given the ethics concerns that your apparent conflict of financial interests in the pharmaceutical industry raise, we call on you to recuse yourself,” wrote the group.

J&J’s blood thinner Xarelto and AstraZeneca’s Type 2 diabetes drug Farxiga are among the 10 drugs that will be subject to price negotiations this year, according to a list unveiled Tuesday by the Biden administration.

Rose, who was appointed by Republican president George W. Bush, owns between $15,000 and $50,000 worth of J&J stock, and shares in AstraZeneca worth up to $15,000, according to his 2022 financial disclosure form. He also owns Moderna stock worth between $15,000 and $50,000, the filing shows.

Until he withdrew on Friday, Rose was the presiding judge in a lawsuit brought in June by the U.S. Chamber of Commerce against the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid services (CMS). The suit asked the court to rule that for Medicare to negotiate drug prices would be unconstitutional.

The pharmaceutical industry has unleashed a torrent of lawsuits this summer in an effort to strip Medicare of its new powers. Merck, Bristol Myers Squibb, Johnson & Johnson, Boehringer Ingelheim, AstraZeneca and the drugmaker lobby PhRMA have all filed complaints in different districts courts.

Legal experts say the drugmakers are scattering their complaints across the country to increase the odds that the litigation will ultimately end up before the Supreme Court.

Merck CEO Robert Davis confirmed on an earnings call earlier this month that the company plans to take its lawsuit all the way to the high court.

“As we look forward, we’re going to take this to the fullest, which means we’ll take it through District Court and, if need be, into Circuit Court and ultimately to the Supreme Court,” Davis said. “So, really that’s the strategy.”

The Chamber had asked Rose to block the program by Oct. 1, the deadline set for drugmakers to sign agreements to participate in the negotiations.