The pharmaceutical industry’s top lobbying group sued the federal government on June 21 over a law that lets Medicare negotiate drug prices directly with pharmaceutical companies. It marks the fourth such lawsuit, following in the footsteps of Merck, Bristol Myers Squibb, and the US Chamber of Commerce.
Each of the four lawsuits has been filed in different circuit courts, which gives the pharma industry a better chance at delaying the law’s implementation, Axios reported.
The law under scrutiny, passed in 2022 as part of the Inflation Reduction Act (IRA), requires the Centers for Medicare and Medicaid Services to negotiate the prices of a small number of brand-name drugs with no generics or biosimilars that are covered under Medicare Part B and Part D, starting in 2026.
PhRMA filed its lawsuit in the Western District of Texas. The lawsuit will run through the US Court of Appeals for the 5th Circuit, which is likely to side with the pharma industry, Nicholas Bagley, a professor at the University of Michigan Law School, told Axios.
“I think that’s likely to be the most sympathetic court because they’re more skeptical of federal power,” Bagley told Axios.
Chris Meekins, a managing director and Washington healthcare policy analyst at investment bank Raymond James, told Axios: “I continue to believe that one of these lawsuits will find a way to successfully delay the implementation of the drug negotiation provisions.”
PhRMA’s stance
PhRMA argues in its lawsuit that the Medicare negotiation law is unconstitutional because it violates the separation of powers clause by giving the US Department of Health and Human Services (HHS) too much authority.
The group also claims the law is a violation of due process because it denies drugmakers the chance to give input on how the policy will be implemented, and that the law imposes excessive fines on manufacturers that refuse to accept the negotiated prices.
“Put simply, the price-setting provisions in the IRA are bad policy,” Stephen Ubl, PhRMA’s president and CEO, wrote in a June 21 tweet. “They threaten our ability to find new treatments and cures, put access to medicines at risk today and in the future, and jeopardize providers’ ability to prescribe the treatments they believe are best for patients.”
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The National Infusion Center Association, a nonprofit trade group, and the Global Colon Cancer Association are coplaintiffs in the lawsuit.
Past lawsuits
As we reported in a previous Healthcare Brew story, Merck was the first to file a lawsuit against the Medicare negotiation law on June 6, arguing that it violates the Fifth Amendment, which says the government can’t take property for public use without providing just compensation.
“The singular purpose of this scheme is for Medicare to obtain prescription drugs without paying fair market value,” the lawsuit, filed in the US District Court for the District of Columbia, stated.
Merck also claims the law “makes a mockery of the First Amendment” by requiring drugmakers to sign agreements stating that the negotiated drug prices are fair and a result of negotiation.
In the complaint, the plaintiffs called the drug price negotiation program a “sham” that does not offer ways for “genuine” negotiations or agreements.
White House Press Secretary Karine Jean-Pierre responded to Merck’s lawsuit on June 6, saying in a statement to Reuters: “We are confident we will succeed in the courts: There is nothing in the Constitution that prevents Medicare from negotiating lower drug prices.”
The US Chamber of Commerce, the largest lobbying group in the country, then filed a lawsuit in the Southern District of Ohio June 9. The chamber said the “government price controls harm patients, limit access to medicine, and stifle American innovation.”
Bristol Myers Squibb, a New York City-based drugmaker, filed its lawsuit against the federal government in the District of New Jersey on June 16, claiming that the Medicare negotiation law is unconstitutional “in at least two ways.”
Bristol Myers Squibb said in a statement that the negotiation law allegedly “has already changed the way we look at our development programs in oncology and beyond, whether it’s a decision to advance a new medicine or pursue additional indications for an existing one.”
Chris Viehbacher, CEO of Cambridge, Massachusetts-based drugmaker Biogen, said his company is also considering filing a lawsuit, Fierce Pharma reported.