Sept 20 (Reuters) - A U.S. appeals court revived a

lawsuit on Friday by healthcare and drug industry groups

challenging the first-ever U.S. law requiring pharmaceutical

companies to negotiate drug prices with the government's

Medicare health insurance program that covers 66 million people.

The decision from the New Orleans-based 5th U.S. Circuit

Court of Appeals did not address the merits of the case, which

was brought by the nation's largest drug industry lobbying

group, Pharmaceutical Research and Manufacturers of America and

others. Instead, the court found only that a Texas judge was

wrong to dismiss the case in February on the grounds that he did

not have jurisdiction to hear the case.

The case is one of at least eight lawsuits seeking to block

the program. So far, none has been successful, and the first

round of price negotiations was allowed to go forward, with the

government last month announcing negotiated price cuts ranging

from 79% to 38% on 10 drugs, including Merck & Co's ( MRK )

diabetes drug Januvia and Novo Nordisk's insulin

products. The new prices go into effect in 2026.

The U.S. Department of Health and Human Services, which

oversees the program, did not respond to a request for comment.

Nor did the plaintiffs, which also include the Global Colon

Cancer Association and the National Infusion Center Association

(NICA).

The drug industry and healthcare groups sued the government

last year in federal court in Austin, Texas, where NICA is

based. They claimed that the drug price negotiation program, a

signature initiative of Democratic President Joe Biden passed as

part of the Inflation Reduction Act, violated the U.S.

Constitution by giving too much power to federal regulators and

imposing excessive fines on companies that refuse to

participate.

U.S. District Judge David Ezra ruled in February that NICA,

which claimed its infusion center members would lose money

because their Medicare reimbursement is tied to the price of the

drugs they administer, could not bring the case in court because

the federal Medicare law required it to bring disputes over

reimbursement to the HHS first.

The judge added that without the Texas-based plaintiff, he

had no jurisdiction to hear the other groups' claims.

But the 2-1 5th Circuit panel on Friday disagreed and said

NICA's claims stemmed from the Inflation Reduction Act, not the

Medicare law, meaning that it was not required to bring its case

before HHS.

Circuit Judge Jennifer Walker Elrod wrote the opinion,

joined by Circuit Judges Kyle Duncan. Both were appointed by

Republicans. Circuit Judge Irma Ramirez, who was nominated by

Biden, dissented, agreeing with Ezra's reasoning.