Medicare Negotiation Legal Battle Takes Center Stage at Federal Court’s Historic Oral Arguments

The Southern District Court of Ohio heard oral arguments on Friday regarding the Medicare Drug Price Negotiation Program. The Chamber of Commerce has filed a lawsuit challenging the program and has requested that it be blocked from operating. The Chamber is seeking a decision by October 1st.

During the hearing, several key points were argued:

Lack of standing

The federal government argued that the Chamber of Commerce has no standing to file a lawsuit on behalf of pharmaceutical companies as it is not a pharmaceutical company itself. They also pointed out that one of the member organizations cited by the Chamber, AbbVie, was not named in the negotiations. The government suggested that AbbVie or its subsidiary, Pharmacyclics, should be the entities to file the lawsuit.

The Chamber’s attorneys argued that the federal government has historically treated corporate entities and their subsidiaries as one, and therefore the Chamber has standing to sue.

Financial harm

The Chamber claimed that AbbVie is already experiencing financial harm due to the program, although talks have not yet begun and any prices set through the program will not go into effect until 2026. The government did not dispute the possibility of companies experiencing financial losses but alluded to certain benefits that manufacturers will enjoy through the program without providing further details.

What constitutes coercion

A common criticism of the Medicare negotiation program is that companies feel coerced into participating. Companies that do not sign agreements to negotiate face possible excise taxes or removal of their products from Medicare. The government argued that Medicare participation is voluntary and cited previous court rulings that found businesses have the option to leave Medicare if they choose.

They also argued that the option to walk away from negotiations gives companies leverage in encouraging the Centers for Medicare and Medicaid Services (CMS) to come up with acceptable prices.

Preliminary injunction

The Chamber has requested a preliminary injunction on the Medicare negotiation program by October 1st. To obtain a preliminary injunction, the Chamber must demonstrate that it will succeed in the case, it will suffer irreparable harm without an injunction, the opposing party won’t suffer substantial harm from the injunction, and it is in the public’s interest.

The Chamber argued that the program is unconstitutional and blocking it would be in the public’s interest. They also claimed that AbbVie has already incurred “unrecoverable” costs due to the program. The government countered that AbbVie will not directly suffer harm and that a final judgment in the case will likely be issued before the potential financial harm can occur.

U.S. District Judge Michael J. Newman acknowledged the “high level of arguments” presented during the hearing and noted the time constraints in reaching a decision on the preliminary injunction request within the next two weeks.

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