PhRMA sues Biden administration over Medicare drug price negotiations

The pharmaceutical industry’s largest lobbying group on Wednesday filed a lawsuit challenging provisions in the Biden administration’s Inflation Reduction Act that will allow Medicare to start negotiating prices for certain drugs.

The lawsuit from the Pharmaceutical Research and Manufacturers of America (PhRMA) argues the law’s signature provision about Medicare negotiation is unconstitutional. PhRMA joined with the National Infusion Center Association (NICA) and the Global Colon Cancer Association (GCCA) to file the suit in the U.S. District Court for the Western District of Texas.

PhRMA CEO Steve Ubl told reporters the provisions amount to “a government mandate disguised as negotiation.” 

“We remain very concerned about the impact this law will have on patients and future innovation,” Ubl said, adding the law has significant barriers to transparency and gives the executive branch too much power to decide the price of medicine. 

The much-anticipated lawsuit marks the fourth such effort to fight against the law in recent weeks. Merck, Bristol Myers Squibb and the U.S. Chamber of Commerce have filed lawsuits against the law. 

The suits have been filed in four federal courts: PhRMA’s in Texas, Merck’s in Washington, D.C., the Chamber of Commerce’s in Ohio and Bristol Myers Squibb’s in New Jersey.

The first 10 drugs that the provision applies to will be chosen in September, with the agreed prices taking effect in 2026. PhRMA executives said they are suing now so the court can stop any potential harm before the process is too far along.

PhRMA represents many of the largest pharmaceutical companies in the world, including Merck and Bristol Myers Squibb. Ubl said the group has “agreement from our members to file this lawsuit.”

The group is arguing the law includes no requirement for checks and balances through public feedback and cuts off administrative and judicial review, violating the Constitution’s separation of power and due process clauses.

Additionally, the lawsuit claims the law violates the Eighth Amendment’s ban on “excessive” fines, because of the excise tax penalty if companies refuse to negotiate. 

“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 during a briefing.

The complaint asks for a permanent injunction to stop the negotiation provision.

The Department of Health and Human Services said it expects to prevail in all the lawsuits.

“As the secretary has already made clear, we will vigorously defend the president’s drug price negotiation law, which is already helping to lower health care costs for seniors and people with disabilities. The law is on our side,” an HHS spokeswoman told The Hill.

Updated at 1:11 p.m.