Pharmaceutical Group’s Lawsuit On Medicare Drug Price Program Dismissed
A federal judge in Austin, Texas, has dismissed a lawsuit filed by the Pharmaceutical Research and Manufacturers of America (PhRMA) and two other groups challenging a new Medicare program allowing negotiation of prices with drug companies for certain costly drugs. U.S. District Judge David Ezra’s decision favored President Joe Biden’s administration, marking another win for the administration’s defense of the negotiation program. The initiative, a key component of the Inflation Reduction Act signed into law by Biden in 2022, aims to save $25 billion annually by 2031 by mandating drugmakers to negotiate prices with the U.S. Centers for Medicare and Medicaid Services (CMS).
Under this program, drugmakers refusing to negotiate face heavy fines or potential exclusion from Medicare, which covers a significant portion of prescription drug spending for around 66 million Americans, primarily aged 65 and older. PhRMA, along with the Global Colon Cancer Association and the National Infusion Center Association (NICA), filed the lawsuit arguing that the penalties imposed by the program violated constitutional protections against excessive fines and delegated legislative power impermissibly to the agency while also infringing on companies’ due process rights.
However, Judge Ezra ruled that the court lacked jurisdiction to address these claims directly, indicating that they must undergo administrative review by the agency before being considered in court. The White House welcomed the ruling as a crucial step in its efforts to reduce healthcare costs, emphasizing the importance of negotiating lower drug prices for the selected drugs under the program.
Despite this setback for PhRMA and other groups, several lawsuits, including those from major drugmakers like Johnson & Johnson, Merck & Co, and AstraZeneca, have been filed challenging the legality of the Medicare negotiation program. While a federal judge in Ohio previously declined to block the law in a case brought by the U.S. Chamber of Commerce, these cases are expected to progress to federal appeals courts and potentially to the U.S. Supreme Court, indicating ongoing legal battles over the future of drug pricing policies in the United States.
