Pharmaceutical lobby group PhRMA joins lawsuit against US Health Department over drug price-setting provisions

USA —The Pharmaceutical Research and Manufacturers of America (PhRMA), a prominent lobby group, has filed a lawsuit against the US health department, following similar legal action taken by Merck & Co. and Bristol Myers Squibb.

The lawsuit challenges the constitutionality of drug price-setting provisions within the Inflation Reduction Act (IRA).

PhRMA’s complaint argues that the IRA’s pricing scheme undermines research and development efforts, as well as patient access to medications.

It also alleges that the provisions violate the US Constitution due to their lack of transparency, accountability, and potential misuse of executive branch power.

Stephen Ubl, CEO of PhRMA, expressed concerns over the IRA’s price-setting mechanism, referring to it as “bad policy” that poses a threat to both pharmaceutical innovation and patient affordability.

Ubl further stated that the IRA violates the Constitution by impeding transparency, granting excessive discretion to the executive branch for setting Medicare drug prices, and employing an impractical enforcement mechanism.

These arguments mirror those made in the lawsuits initiated by Merck and Bristol Myers Squibb, as well as the US Chamber of Commerce.

Eli Lilly and Biogen have also indicated their intent to sue the government regarding this matter, with legal experts speculating that the lawsuits may eventually reach the Supreme Court.

PhRMA’s lawsuit contends that the IRA’s price-setting provisions contradict the principles of separation of powers and non-delegation outlined in the Constitution.

Congress, according to the complaint, granted the Health and Human Services (HHS) department broad authority to establish prices within Medicare, but failed to impose sufficient limitations on the agency’s exercise of this newfound power.

James Stansel, General Counsel for PhRMA, argued that Congress took unconstitutional shortcuts by assigning the executive branch the task of replacing market-based drug prices in Medicare with a new set of prices determined solely by the agency.

The lawsuit also highlights the lack of transparency in the price-setting process. Manufacturers are allegedly denied the opportunity to provide input on policy implementation upfront, and they have no access to judicial review after pricing decisions are made.

Proposed HHS guidance further restricts manufacturers from disclosing information about the price-setting process, rendering it even more opaque.

To ensure compliance, drugmakers that choose not to participate in negotiations face escalating excise taxes, starting at 186% of a medicine’s total sales revenue and reaching a maximum of 1900%.

The IRA, a controversial law, grants the Centers for Medicare and Medicaid Services (CMS) the authority to directly negotiate prescription drug prices with pharmaceutical companies for the first time.

The CMS will publish a list of the initial ten Medicare Part D drugs subject to price setting by September, with additional products added in subsequent years.

Once a drug is selected, manufacturers are obligated to engage in negotiations where the HHS determines a “maximum fair price.”

PhRMA argues that the statute defines this maximum price with minimal consideration for a price floor.

The lobby group also claims that the government has no intention of disclosing the methodology behind price determination until months after the price has been established.

In response to PhRMA’s lawsuit, an HHS spokesperson affirmed the department’s commitment to vigorously defending the drug price negotiation law.

They stated that the law is already contributing to cost reduction for seniors and individuals with disabilities.

Merck has announced that its diabetes drug Januvia (sitagliptin) is expected to be subjected to the IRA’s price-setting scheme starting in 2023.

Other Merck products like Janumet (sitagliptin/metformin) and Keytruda (pembrolizumab) are projected to enter the program in subsequent cycles.

Bristol Myers Squibb anticipates that its anticoagulant Eliquis (apixaban) will be subject to negotiations this year, and Opdivo (nivolumab) in the future.

An analysis published in the Journal of Managed Care and Specialty Pharmacy suggests that the list of affected drugs may expand to include Pfizer’s Ibrance, Johnson & Johnson’s Xarelto, Eli Lilly’s Jardiance, Amgen’s Enbrel, AstraZeneca’s Symbicort, and other medications.

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