The National Infusion Centre Association, the Global Colon Cancer Association, and Pharmaceutical Research and Manufacturers of America (PhRMA) have all joined the legal battle against Medicare’s price-negotiation effort that was established under the Inflation Reduction Act (IRA).
After prior challenges by Merck & Co, Bristol-Myers Squibb, and the US Chamber of Commerce in different jurisdictions, the combined case in a Texas federal district court is the fourth legal action brought against the legislation signed by President Joe Biden last year.
Like the other lawsuits, the PhRMA one alleges that the Medicare bargaining policy is unconstitutional. Several of the leading global pharma corporations from across the world, including Johnson & Johnson, Pfizer, Eli Lilly, Novartis, and Roche, are members of the lobbying group.
The case expands on the preceding complaints, which principally centered on the First and Fifth Amendments, by alleging a violation of the Eighth Amendment.
It argues that the act violates the Constitution’s due process and separation of powers sections because it excludes any obligation for public comment and suspends administrative and judicial scrutiny.
According to PhRMA, it also contains a severe excise “tax” to force manufacturers to adhere to the government-mandated pricing that is out of proportion to the alleged infraction, making it an exorbitant fine that is forbidden under the Eighth Amendment.
According to the other lawsuits, the Medicare price-negotiation process violates both the First Amendment right to free speech and the Fifth Amendment by requiring businesses to sign agreements stating that the prices being set are fair and by requiring them to sell goods at below-market prices for public use.
The statute “violates the US Constitution because it includes barriers to transparency and accountability, gives the executive branch unrestricted discretion to set the price of medicines in Medicare, and relies on an absurd enforcement mechanism to force compliance,” according to Stephen Ubl, president and chief executive of the PhRMA.
He reaffirmed accusations that the move would jeopardize the industry’s capacity to make the R&D investments required to create new medicines and deliver them to patients.
The Department of Health and Human Services (HHS) is being asked by the three groups to stop putting the plans into effect without “adequate procedural processes,” such as public notice, discussion periods, and judicial review of legislative interpretation.
Brian Nyquist, CEO of NICA, stated that his organization felt obligated to participate since Medicare might set payment levels below purchase cost and infusion providers have little influence over the costs of the medications they provide.
The implementation of the IRA (International Reference Pricing) last year brought about significant changes in the pharmaceutical landscape. Medicare, the government-run insurance program for elderly Americans, is now empowered to negotiate prices with pharmaceutical companies for a specific set of medications. This marks a departure from previous regulations that prohibited such negotiations.
As per the legislation, starting in 2026, the Secretary of Health and Human Services will have the authority to engage in price negotiations for selected drugs with substantial budget implications, which are covered under Medicare Parts B and D. This move aims to curb rising healthcare costs and make medications more affordable for Medicare beneficiaries.
Furthermore, the potential ramifications of this policy change extend beyond pricing. The ongoing shortages of medications like Adderall and Vyvanse could lead to consolidation within the pharmaceutical industry. Consequently, community-based infusion capacity might be reduced, leaving patients with hospitals as their only option for treatment. Unfortunately, hospital settings tend to be the most expensive option available, adding to the financial burden for patients.
To summarize, the IRA, enacted last year, enables Medicare to negotiate prices for certain high-budget impact drugs covered under Medicare Parts B and D, starting from 2026. This policy change, aimed at reducing costs, may contribute to industry consolidation and limit community-based infusion capacity, potentially forcing patients to seek more costly hospital-based care.
