Earlier this month, Merck became the first entity to legally challenge the White House’s Medicare drug pricing negotiation program. Since then, three more lawsuits have been filed in opposition to the program. While legal experts agree that the plaintiffs’ arguments probably won’t hold up during a court battle, these lawsuits still could delay when the government’s ability to negotiate price goes into effect.
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HHS and CMS are currently facing four drug pricing negotiation-related lawsuits. Merck filed its lawsuit on June 6. The U.S. Chamber of Commerce filed a complaint against the two federal bodies on June 9, and Bristol Myers Squibb filed one on June 16. On June 21, a joint lawsuit was filed by the National Infusion Center Association, the Global Colon Cancer Association, and the Pharmaceutical Research and Manufacturers of America (PhRMA).
In their lawsuits, the plaintiffs charge that the White House’s Medicare drug price negotiation program violates the Constitution and stifles innovation in the pharmaceutical field. Now that there are lawsuits filed across various district courts and in different circuits, the legal battles could take years. This could potentially delay the White House’s proposed timeline for its program, legal experts say.
The Biden administration’s plan for drug pricing reform seeks to save $25 billion annually by 2031 through negotiating the prices for medicines covered by Medicare. In March, the White House released a framework of what these negotiations would look like.
The first Medicare drug price negotiation is set for September, when the Centers for Medicare & Medicaid Services will determine its 10 most costly medications. Once negotiations for this group of drugs are over, the prices will go into effect in 2026.
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When the U.S. announced that it was going to start allowing drug price negotiations in July 2021, it was seen as a rare legislative loss for the pharmaceutical industry — drugmakers swiftly took issue with the program, saying that it would lead to significant profit losses and therefore hinder innovation.
The lawsuits filed by Merck, Bristol Myers Squibb and the Chamber of Commerce allege that the White House’s drug pricing reform program violates the First and Fifth Amendments. The plaintiffs claim that the program goes against Fifth Amendment’s Compensation Clause — which stipulates that private property not “be taken for public use without just compensation.”
However, healthcare law expert Robin Feldman told MedCity News that patents are not considered private property for the purposes of the Fifth Amendment’s Compensation Clause according to historical and textual precedents. For this reason, she doesn’t believe that the plaintiffs have a justifiable basis for their claims.
In their complaints, Merck, Bristol Myers Squibb and the Chamber of Commerce also said that the Medicare drug pricing plan violates the First Amendment’s protections of free speech by forcing drugmakers to sign agreements saying that the prices are fair.
Merck argued that the government is making pharmaceutical firms perform “political Kabuki theater” by having them pretend they think the prices are satisfactory. Similarly, Bristol Myers Squibb said that it “does not agree that forced sales at innovation-stifling discounts are fair to anyone.”
Feldman doubts that these arguments will hold up in court because contracts and disclosure requirements typically aren’t considered forms of speech.
The joint lawsuit filed by PhRMA — which is a highly influential lobbying group — and the two cancer trade organizations argues that the White House’s drug pricing reform plan gives too much power to HHS. The complaint alleges that Congress “has set no meaningful constraints on the agency’s exercise of this new price-setting authority.”
PhRMA and the two organizations also contend that the plan imposes a “crippling” excise tax designed to force drugmakers into cooperating with the government-set medication prices, thereby constituting an excessive fine forbidden by the Eighth Amendment. The drug pricing plan stipulates that drugmakers will face an excise tax of up to 95% of a drug’s U.S. sales across all buyers if they decide not to accept a government-set price.
Shortly after this lawsuit was filed, Senate Finance Committee Chair Ron Wyden, D-Oregon, released a statement defending the White House’s drug plan.
“It’s no surprise that Big Pharma wants to stop Medicare from negotiating lower drug prices on behalf of American seniors. I expect the Biden Administration to vigorously defend Medicare’s bargaining power so seniors will see the lower drug prices they expect,” Wyden said.
The White House said it is “confident” that it will be able to defeat the lawsuits filed against its Medicare drug pricing reform program.
“There is nothing in the Constitution that prevents Medicare from negotiating lower drug prices. Anytime profits of the pharmaceutical industry are challenged, they make claims about it hindering their ability to innovate. Not only are these arguments untrue, but the American people do not buy them,” White House Press Secretary Karine Jean-Pierre said during a recent press conference.
Feldman said the plaintiffs going after HHS and CMS will “have a heavy lift” to convince the court that drug pricing negotiations violate the Constitution, but she noted that the lawsuits were likely filed with the intention of going all the way to the Supreme Court.
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