A major pharmaceutical industry trade association, PhRMA, and two other groups filed a lawsuit challenging a new program that allows Medicare to negotiate prices with drug companies for selected costly drugs. However, U.S. District Judge David Ezra in Austin, Texas, dismissed the lawsuit and sided with President Joe Biden’s administration. The PhRMA spokesperson, Nicole Longo, said they are disappointed with the court’s decision and are weighing their next legal steps.
The program, part of the Inflation Reduction Act that the Democratic president signed into law in 2022, aims to save $25 billion annually by 2031. It requires drugmakers to negotiate the prices of selected expensive drugs with the U.S. Centers for Medicare and Medicaid Service (CMS), which oversees Medicare. Drugmakers that refuse to participate must either pay heavy fines or withdraw altogether from Medicare, which covers 66 million Americans mostly aged 65 and older and accounts for a large share of U.S. prescription drug spending.
PhRMA, the Global Colon Cancer Association, and the National Infusion Center Association (NICA) argued the penalties violated the U.S. Constitution’s Eight Amendment protections against excessive fines, impermissibly delegated legislative power to the agency, and violated companies’ due process rights. However, Judge Ezra said the court lacked jurisdiction to hear NICA’s claims because they arose under the Medicare Act and could only be heard by a court following an administrative review by the agency.
Several other lawsuits have been filed by major drug makers and groups including Johnson & Johnson, Merck & Co, and AstraZeneca. While a judge recently heard arguments in AstraZeneca’s case, another federal judge in Ohio refused to block the law in a case brought by the U.S. Chamber of Commerce, the nation’s largest business lobbying group. These cases are expected to reach federal appeals courts and possibly the U.S. Supreme Court.