Japan-based Astellas Pharma on Wednesday withdrew a lawsuit filed against the U.S. government, days after its prostate cancer drug was spared from the first list of drugs that will be subject to Medicare price negotiations.

The U.S. government, late last month, selected the first 10 drugs, including the top-selling blood thinner Eliquis from Bristol Myers Squibb and Pfizer, which will face price negotiations as part of President Joe Biden's Inflation Reduction Act.

Several analysts had expected Astellas' prostate cancer drug to be part of the list.

Astellas filed a lawsuit in July against the U.S. government, which was one of several similar challenges filed to block price negotiations, arguing that the law and forced price cuts would violate various amendments to the U.S. constitution.

"Our decision to withdraw the case does not change our fundamental belief that in its current form, the Medicare Drug Price Negotiation Program created by the Inflation Reduction Act is bad policy and unconstitutional," Astellas said on Wednesday.

The U.S. Department of Health and Human Services, which oversees the Medicare program for Americans aged 65 and older, kicked off the negotiation process for the 10 drugs whose new prices will go into effect in 2026. The program aims to save $25 billion per year on drug prices by 2031.

(Reporting by Mariam Sunny in Bengaluru; Editing by Shounak Dasgupta)