Pharmaceutical trade group sues US over Medicare drug price negotiation plans

[June 22, 2023]  By Patrick Wingrove

NEW YORK (Reuters) -The Pharmaceutical Research and Manufacturers of America (PhRMA), the leading industry lobby group, and two other organizations on Wednesday said they were suing the U.S. government to block enforcement of a program that gives Medicare the power to negotiate drug prices.

In a complaint filed in a federal court in Texas, PhRMA along with the National Infusion Center Association and the Global Colon Cancer Association, which counts PhRMA and some drug companies as members, said the drug price negotiation program was unconstitutional.

This marks the fourth lawsuit challenging the law, which is part of President Joe Biden’s signature Inflation Reduction Act (IRA), after separate legal challenges by Merck & Co, Bristol Myers Squibb, and the influential business group the U.S. Chamber of Commerce.

The pharmaceutical industry claims negotiating prices of its products with the government health plan for Americans age 65 and older will curtail profits and compel them to pull back on developing groundbreaking new treatments.

PhRMA represents many of the largest pharmaceutical companies in the world, including Merck and Bristol Myers.

Americans pay more for prescription medicines than any other country. The Biden administration's drug pricing reform aims to save $25 billion annually by 2031 through price negotiations for the drugs most costly to Medicare.

The latest lawsuit argues that the "unrestrained authority" given to the Department for Health and Human Services (HHS) by Congress conflicts with the United States' separation-of-power principle.

"Congress took a series of unconstitutional shortcuts, giving the executive branch the open ended task of replacing market based prices in Medicare with an entirely new set of prices at the (Medicare) agency's own choosing," PhRMA general counsel James Stansel said at a press conference.

Illustration photo shows various medicine pills in their original packaging in Brussels, Belgium August 9, 2019. REUTERS/Yves Herman/Illustration/File Photo

The lawsuit also contends that the price negotiation program violates the U.S. Constitution's Eight Amendment, which protects against excessive fines, and Fifth Amendment by exempting key decisions from public input.

PhRMA and the other two groups are seeking an injunction against the price caps and a declaration that the IRA's price negotiation is unconstitutional.

The negotiations are scheduled to start in September after the agency that runs Medicare and Medicaid releases its list of 10 costly drugs initially selected for the process, with the agreed prices taking effect in 2026.

The suits challenging the plan have been filed in four different federal courts, with Merck's in Washington, D.C., the Chamber of Commerce in Ohio and Bristol Myers' in New Jersey.

In response to the previous lawsuits, the White House said there is nothing in the U.S. Constitution that prevents Medicare from negotiating lower drug prices.

A spokesperson for HHS on Wednesday said the law is on its side.

“As the (HHS) secretary has already made clear, we will vigorously defend the president’s drug price negotiation law, which is already helping to lower healthcare costs for seniors and people with disabilities."

(Reporting by Patrick Wingrove and Michael Erman; Editing by Mark Porter and Bill Berkrot)

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