Drugmakers call upon the courts
Seeking a halt in Medicare price negotiations
WASHINGTON — The pharmaceutical industry, which suffered a stinging defeat last year when President Biden signed a law authorizing Medicare to negotiate the price of some prescription medicines, is now waging a broad-based assault on the measure — just as the negotiations are about to begin.
The Inflation Reduction Act is a signature legislative achievement for Biden, who has boasted that he took on the drug industry and won. The provisions allowing Medicare to negotiate prices are expected to save the government an estimated $98.5 billion over a decade while lowering insurance premiums and out-of-pocket costs for many older Americans.
On Tuesday, Johnson & Johnson became the latest drugmaker to take the Biden administration to federal court in an attempt to halt the drug pricing program. Three other drug companies — Merck, Bristol Myers Squibb, and Astellas Pharma — have filed their own lawsuits, as have the industry’s main trade group and the US Chamber of Commerce.
The suits make similar and overlapping claims that the drug pricing provisions are unconstitutional. They are scattered in federal courts around the country, a tactic that experts say gives the industry a better chance of obtaining conflicting rulings that will put the legal challenges on a fast track to a business-friendly Supreme Court.
The legal push comes just weeks before the Centers for Medicare & Medicaid Services is scheduled to publish a longawaited list of the first 10 drugs that will be subject to negotiations. The list is due out by Sept. 1; makers of the selected drugs have until Oct. 1 to declare whether they will participate in negotiations — or face steep financial penalties for not doing so. The lower prices will not take effect until 2026.
This month, the chamber asked a federal judge in Ohio to issue an injunction that would block any negotiations while its case is being heard.
Lawrence Gostin, an expert in public health law at Georgetown University, said the Supreme Court might be sympathetic to some of the industry’s arguments. In particular, he pointed to a claim by drugmakers that by requiring them to negotiate or pay a fine, the law violates the Fifth Amendment’s prohibition on the taking of private property for public use without just compensation.
“The Supreme Court is openly hostile to any perceived violation of the Fifth Amendment,” Gostin said.
For Biden and his fellow Democrats, that would be a painful blow. The president and Democrats have long campaigned on reducing drug prices and plan to make it a central theme of their 2024 campaigns.
Republicans opposed the drug pricing provisions. But the politics of the issue are treacherous for them. Because so many Americans are concerned about high drug prices, it is hard for Republicans to come to the industry’s defense, said Joel White, a Republican strategist.
For drugmakers, the stakes of the legal challenges are bigger than just their business with Medicare, their biggest customer. The industry fears that Medicare will, in effect, set the bar for all payers and that once the government’s lower prices are made public, pharmacy benefit managers negotiating on behalf of the privately insured will have more leverage to demand deeper discounts.