Pharmaceutical Industry Sues Biden Administration Over Medicare Drug Price Negotiations

The pharmaceutical industry, along with the prominent lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA), has filed a lawsuit against the Biden administration. This legal action is in response to Medicare's expanded powers to negotiate lower prescription drug prices for seniors under the Inflation Reduction Act. The lawsuit claims that these discussions between Medicare and drugmakers violate the U.S. Constitution and fail to provide adequate procedural protections for pharmaceutical companies.

PhRMA, representing Eli Lilly, Pfizer, and Johnson & Johnson, joined forces with the National Infusion Center Association and the Global Colon Cancer Association to challenge the legality of Medicare's negotiations. The associations are seeking a court ruling to declare the program illegal and prevent the Department of Health and Human Services (HHS) from engaging in negotiations without ensuring proper safeguards for drug producers. Despite CNBC's attempts to reach out to HHS for comment, no immediate response was received.

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This lawsuit is the fourth of its kind and targets the Inflation Reduction Act, which was passed by President Joe Biden and Democratic lawmakers last summer. The Act aims to lower pharmaceutical industry profits and increase the accessibility of medications for older Americans. Previously, PhRMA-represented Merck and Bristol Myers Squibb, along with the U.S. Chamber of Commerce, also challenged the Act's provisions in a separate lawsuit.

The current complaint alleges that the Act grants excessive power to HHS, which could have negative implications for the industry. PhRMA and the other organizations argue that the Act's "crippling" excise tax forces drugmakers to accept the government's drug prices, constituting an Eighth Amendment-prohibited exorbitant fine. Furthermore, the complaint asserts that the lack of public and pharmaceutical firm input in Medicare discussions violates due process.

Additionally, PhRMA CEO Stephen Ubl criticized the Inflation Reduction Act, stating that it poses a threat to ongoing research and development efforts and patients' access to medicines. Ubl further contends that the Act violates the U.S. Constitution due to its lack of transparency, accountability, and reliance on an enforcement mechanism that he considers absurd.

The legal battle between the pharmaceutical industry and the Biden administration over Medicare drug price negotiations is poised to have significant ramifications for both parties. The outcome of this lawsuit will determine the fate of the program and could shape future policies aimed at controlling drug prices. If successful, the lawsuit may curb Medicare's ability to negotiate lower prices, potentially limiting affordability and accessibility for older Americans.

The resolution of this lawsuit will have far-reaching consequences for the future of drug pricing policies and healthcare affordability in the United States.