April 29 (Reuters) - A U.S. judge on Monday rejected a

challenge by Bristol Myers Squibb ( BMY ) and Johnson & Johnson ( JNJ )

to a law requiring them to negotiate the prices of their

blockbuster blood clot prevention drugs with the U.S

government's Medicare health insurance program or pay heavy

penalties.

U.S. District Judge Zahid Quraishi in Trenton, New Jersey,

became the fourth federal judge to uphold the program, one of

Democratic President Joe Biden's signature initiatives, against

drug industry challenges, rejecting their argument that it was

an illegal taking of their property.

"In short, defendants are not taking drugs from plaintiffs,"

Quraishi wrote, adding that they were free to stop participating

in Medicare if they did not want to negotiate.

The drugmakers did not immediately respond to requests for

comment, though Bristol Myers has already filed a notice in

court that it was appealing the ruling. Drugmakers have argued

that it is not feasible to withdraw from Medicare because it

represents nearly half the U.S. prescription drug market.

Blood thinners Eliquis from Bristol Myers and J&J's Xarelto

were among the 10 drugs chosen last August for the first round

of negotiations under the program, which was part of the 2022

Inflation Reduction Act. Biden and other supporters said the

negotiated prices, to go into effect in 2026, will bring down

prescription drug costs.

Eliquis brought Bristol Myers about $8.52 billion in U.S.

sales last year, while J&J recorded $2.36 billion in Xarelto

sales. Eliquis is shared with Pfizer ( PFE ) and Xarelto with Bayer,

which were not part of the lawsuits.

Quraishi's ruling comes two days before a

conservative-leaning panel of the 5th U.S. Circuit Court of

Appeals hears an appeal by PhRMA, the leading U.S. drug industry

group, seeking to revive its lawsuit challenging the program

after it was dismissed in February.

A Delaware federal judge last month rejected a challenge to

the program by British drugmaker AstraZeneca ( AZN ). An Ohio

federal judge in September rebuffed another lawsuit by the U.S.

Chamber of Commerce, the nation's largest business lobbying

group.

If the price negotiations are allowed to go forward, the

first negotiated prices would be set in September, with more

drugs added in future years. The program aims to save $25

billion in drug costs annually by 2031.

Industry analysts have said that the negotiated discounts

could be steep, ranging from the statutory minimum of 25% to as

much as 60%.