The pharmaceutical industry is launching a legal attack on Medicare’s newly granted authority to negotiate drug prices. In a move that could impede a key Biden initiative, Merck & Co., the U.S. Chamber of Commerce, and Bristol Myers Squibb have all filed lawsuits against the Biden administration in an attempt to block Medicare’s price negotiation program established by the Inflation Reduction Act (IRA). The plaintiffs argue that the program violates the First and Fifth Amendments.
The parties involved claim that their freedom of speech has been violated because the negotiation process implies that the companies agree to the prices set, which they believe to be unfair. While representatives from Merck and the Chamber of Commerce are not opposed to negotiating drug prices with the government, they take issue with how the system has been set up.
The pharmaceutical industry argues that their Fifth Amendment rights are violated by allowing Medicare to negotiate prices because they will not receive just compensation. However, legal scholars are criticizing the arguments behind these cases, stating that there is no requirement in the law for the negotiated prices to be fair.
Critics also point out that the government routinely negotiates prices with other companies in procurement decisions, and the Medicare drug price negotiation program is no different. They argue that the legislation lacks specific guidance on price valuation, making it different from other schemes. Additionally, the IRA explicitly states that Medicare’s determinations will not be subject to administrative and judicial review, giving Medicare unchecked power.
These lawsuits have the potential to slow down the government’s ability to negotiate deals, as any of the plaintiffs could file a preliminary injunction to block the Medicare program until the cases are decided by the courts. However, there are also hurdles for the parties opposed to the negotiations. For example, the federal government could argue that organizations like the Chamber of Commerce cannot prove harm as they are not pharmaceutical companies.
Supporters of Medicare negotiating with drug companies argue that the companies have the option to walk away from negotiations or reject suggested prices, albeit at the cost of losing a lucrative income stream from Medicare. They believe that this argument, along with the penalties imposed on non-negotiating companies, demonstrates that the price negotiations do not violate the core amendments at the center of the legal challenges.
The timing of the lawsuits is intriguing as they could potentially be fast-tracked to the Supreme Court if different courts reach conflicting rulings. While the outcomes are uncertain, the Supreme Court may determine whether the program can continue during the legal proceedings. It is also speculated that the timing of the lawsuits was motivated by the desire to appear before the Supreme Court and prevent the negotiation process from progressing further.
Overall, these lawsuits represent an ongoing battle between the pharmaceutical industry and the government over drug pricing control and the extent of government power.
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