The newly-announced “negotiated” prices for the first ten drugs subject to price controls under the Inflation Reduction Act (IRA) are set to go into effect for people with Medicare Part D prescription drug coverage beginning January 1, 2026. However, there are still nine lawsuits challenging the drug price negotiation program moving their way through the courts. These lawsuits, brought by pharmaceutical manufacturers and trade associations, have raised a number of constitutional and statutory claims. The Biotechnology Innovation Organization (BIO) recently filed an amicus brief arguing that the IRA’s drug price controls involve unconstitutional coercion and will destroy innovation in transformational treatments that save patients’ lives. 

Brian Reid of Reid Strategic has charted the progress of the various lawsuits challenging the IRA’s Medicare drug price negotiation program as of August 21, 2024, on his well-respected Cost Curve blog. His perspective: “The conventional wisdom is industry has an uphill road with all of these suits, but that there are so many shots on goal that no one seems to be comfortable declaring the game to be over.” 

Source: Charting Where We Are with IRA Lawsuits (beehiiv.com) 

The law firm White & Case summarizes the challenges to the IRA drug pricing provisions:  

• Constitutional challenges: “The core of the challengers’ arguments is that the excise taxes imposed for non-compliance are so high that they coerce compliance and force manufacturers to agree on prices in violation of the First Amendment, amount to an unlawful taking of property without just compensation under the Fifth Amendment, and are excessive fines in violation of the Eighth Amendment.” 

• Statutory challenges: “While the constitutional challenges are at the forefront, Plaintiffs have also brought procedural challenges, alleging the negotiation provision violates the Administrative Procedure Act (APA) because HHS has issued rules to implement the law without notice and comment, and HHS improperly expanded definitions and requirements for inclusion under law through published guidance.” 

KFF adds that, “[o]ther constitutional challenges include that the program violates the separation of powers clause and the due process clause.” 

So far, these legal challenges have not been successful, “with the lower courts ruling in favor of the government and denying motions to pause implementation of the rule.” However, the cases’ various plaintiffs are appealing the lower courts’ decisions and “multiple Circuit Courts of Appeal [are] poised to hear the issues.” If the “Circuit Courts rule in different directions resulting in a Circuit split,” the U.S. Supreme Court may end up as the final arbiter. 

Brian Reid writes that, while PhRMA is closest to getting a decision on its appeal, the “two most interesting cases remain AstraZeneca and Novo Nordisk, both of which include not just constitutional objections but also allegations that CMS screwed up the way they interpreted the law.” 

BIO’s Amicus Brief 

BIO recently filed an amicus brief in the suit from Bristol Myers Squibb (BMS) and Janssen. The suit argues that the IRA’s drug price program violates the Fifth Amendment by forcing drugmakers to agree to sell their products at below-market prices and that the program forces manufacturers “to endorse government messaging on what is, and is not, a ‘fair price,’ in violation of the First Amendment. BIO’s amicus brief agrees, saying the IRA involves unconstitutional coercion and will destroy innovation that saves patients’ lives. As BIO’s amicus brief states, “[b]y employing a pricing structure divorced from market or business realities, the Program . . . will inflict serious consequences on the expansion of indications for existing medications and on the development of new medications.” 

CBSA’s Advocacy 

To learn more about CBSA’s advocacy related to the IRA, read CBSA’s September 3, 2024, blog post: Weekly Policy Blog: CMS Announces MFPs for First Set of Drugs Subject to Price Controls Under the IRA.