The largest lobbying group in the pharmaceutical industry, the Pharmaceutical Research and Manufacturers of America (PhRMA), has filed a lawsuit challenging certain provisions in the Biden administration’s Inflation Reduction Act. These provisions allow Medicare to negotiate prices for specific drugs. The lawsuit, filed in the U.S. District Court for the Western District of Texas, argues that the signature provision of the law regarding Medicare negotiation is unconstitutional. PhRMA has joined forces with the National Infusion Center Association (NICA) and the Global Colon Cancer Association (GCCA) in this legal action.
According to PhRMA CEO Steve Ubl, these provisions are essentially a government mandate disguised as negotiation. Ubl expressed concerns about the impact this law will have on patients and future innovation. He believes that the law lacks transparency and grants too much power to the executive branch in determining drug prices.
This lawsuit is the fourth legal effort to push back against the law in recent weeks. Merck, Bristol-Myers Squibb, and the U.S. Chamber of Commerce, a prominent business group, have also filed separate lawsuits challenging the law. The lawsuits have been filed in different federal courts across the country.
The first ten drugs subject to the provisions will be chosen in September, and the agreed-upon prices will come into effect in 2026. PhRMA executives have expressed the urgency of their lawsuit in order to mitigate potential harm before the process advances too far.
PhRMA represents leading pharmaceutical companies such as Merck and Bristol-Myers. The group has obtained agreement from its members to take legal action.
The lawsuit argues that the law lacks checks and balances, does not involve public feedback, and restricts administrative and judicial review, thereby violating the Constitution’s separation of power and due process clauses.
Furthermore, the complaint claims that the law violates the Eighth Amendment’s prohibition on “excessive” fines due to the excise tax penalty imposed if companies refuse to negotiate.
PhRMA’s general counsel, James Stansel, stated during a briefing that Congress took unconstitutional shortcuts by granting the executive branch the authority to replace market-based drug prices in Medicare with a new set of prices chosen by the Medicare agency.
The complaint seeks a permanent injunction to halt the negotiation provision.
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