Exactly one year has passed since President Joe Biden’s signature inked the Inflation Reduction Act (IRA) into law. In a matter of weeks, the Center for Medicare and Medicaid Services (CMS) is slated to unveil its inaugural list of medications earmarked for Medicare pricing negotiations, effective 2026.
In the wake of last summer’s failed lobbying efforts by the pharmaceutical industry against the IRA, a new battleground has emerged. Multiple legal challenges have been mounted nationwide, challenging the statute itself, as highlighted in a recent court filing by the U.S. Department of Justice (DOJ).
Evidently, after the lobbying endeavors faltered, drug manufacturers and interest groups promptly resorted to litigation, collectively asserting that the IRA violates the US Constitution. The US Chamber of Commerce, a vocal player in this arena, joined forces with drugmakers and the pharmaceutical trade group PhRMA to lodge a lawsuit against the alleged “illegal price controls” embedded in the IRA. Moreover, the Chamber sought a preliminary injunction to halt the program’s implementation.
However, the DOJ has presented a different perspective, asserting that pursuing an injunction would prove futile.
The normal course of litigation, the DOJ contends, would likely reach a conclusion before the pricing controls come into effect in 2026. Central to the Chamber’s argument is its claim that the IRA’s Medicare pricing negotiation mechanism is unconstitutional. The Chamber labels it as an “unprecedented, one-sided regime,” contending that it could potentially stifle free enterprise and competitiveness. In response, the DOJ counters by highlighting that the framework does indeed offer drug manufacturers a choice – either selling products at mutually agreed prices or exploring alternative avenues.
Among the pharmaceutical giants challenging the IRA are Merck, Bristol Myers Squibb, Johnson & Johnson, and the industry’s foremost trade group, PhRMA. As legal battles unfold, the actual commencement of Medicare price negotiations looms closer. September 1 marks the date when CMS is poised to unveil the roster of drugs slated for Medicare price negotiations beginning in 2026. This anticipated list features heavyweights of the industry, including Merck’s Januvia, AbbVie’s Imbruvica, and Eli Lilly’s Trulicity.
Beyond the realm of Medicare pricing negotiations, the IRA encompasses additional measures, including the government’s authority to levy financial penalties on companies that hike prices faster than the inflation rate. President Biden affixed his signature to the bill last August, setting in motion a consequential shift in the pharmaceutical landscape.
