A federal judge has dismissed a lawsuit brought by a major pharmaceutical industry lobbying group and two other organizations challenging Medicare’s new powers to negotiate prices for expensive prescription medicines. The decision is seen as an early victory for the Biden administration as it faces numerous legal challenges from drugmakers regarding Medicare drug price negotiations.
The Inflation Reduction Act, a key policy aimed at making medicines more affordable for seniors, has the potential to impact pharmaceutical industry profits. Medicare recently issued its initial drug price offers to manufacturers for the first 10 medications subject to negotiations, with final negotiated prices set to take effect in 2026.
U.S. Judge David Ezra of the Western District of Texas ruled in favor of the Biden administration, dismissing the suit by the Pharmaceutical Research and Manufacturers of America (PhRMA), the Global Colon Cancer Association, and the National Infusion Center Association (NICA). The plaintiffs argued that the price talks were unconstitutional. However, Judge Ezra dismissed NICA from the case on jurisdictional grounds, stating that their claims fell under the Medicare Act and should be heard by a court following an administrative review by the federal agency.
PhRMA expressed disappointment with the court’s decision and is considering its next legal steps. The organization represents some of the largest drugmakers in the world, including Eli Lilly, Pfizer, and Johnson & Johnson. PhRMA and the other organizations involved in the lawsuit may appeal the decision in hopes of obtaining conflicting rulings from federal appellate courts, which could expedite the issue to the Supreme Court.
Several major companies with drugs selected for negotiations, such as J&J, Merck, and Bristol Myers Squibb, have filed separate lawsuits challenging the constitutionality of the price talks. These cases are still pending. In September, a federal judge in Ohio denied a preliminary injunction sought by the Chamber of Commerce, one of the largest lobbying groups in the country, which aimed to block the price talks before October 1.
PhRMA, NICA, and the Global Colon Cancer Association filed their lawsuit in June, alleging that the negotiations granted excessive authority to the Department of Health and Human Services. The suit also argued that the price talks violated the Eighth Amendment due to the inclusion of a “crippling” excise tax aimed at pressuring drugmakers to accept government-dictated prices. Furthermore, the groups claimed that the price talks violated due process by denying pharmaceutical companies and the public input on the implementation of Medicare negotiations.
Attorneys from the Department of Justice, representing the Department of Health and Human Services, countered the claims by stating that NICA lacked standing since it does not manufacture or sell prescription drugs subject to the negotiations.
While this ruling marks a win for the Biden administration, the legal battle over Medicare’s drug price negotiations is far from over. The outcome could potentially reach the Supreme Court, where a final decision on the constitutionality of the policy will be made. For now, seniors and advocates for affordable prescription drugs will continue to monitor the ongoing legal challenges and their potential impact on healthcare costs.
