As biopharma companies look to prove price setting provisions in the Inflation Reduction Act are unconstitutional, lawmakers unveil legislation to further reduce drug costs.
Pictured: US Capitol building at sunset/iStock, FotografieLink
Biopharma giants have begun dropping programs for drugs in an attempt to mitigate the potential loss in profit that might occur when the government starts negotiating drug prices in a few months. In addition, some companies, plus PhRMA, the US Chamber of Commerce and several state chambers of commerce, have sued the Biden administration over the negotiation program encompassed in the recently passed Inflation Reduction Act (IRA), seeking to block its implementation.
But amid these actions, House Democrats have unveiled legislation that would expand the scope of drug price negotiations. The new legislation, introduced late last month, would extend the program to people with private health insurance and increase the number of drugs in the program from 20 to 50 annually.
As it stands, the price negotiations only cover drugs for the 64 million people on Medicare, about 18% of the U.S. population. This expansion would include another 164 million and their families who have private health insurance and 16 million on Marketplace coverage, including almost everyone in the country.
“This legislation is another step to bringing down the costs of prescription drugs and putting an end to the unconscionable decision to forgo life-saving medication,” Ways and Means Committee Ranking Member Richard E. Neal, D-MA, said in a press release.
But the biopharma industry sees it differently.
“It’s troubling that some policymakers prefer scoring political points over driving real, bipartisan reforms that would help patients,” Sarah Ryan, a PhRMA spokesperson, told BioSpace. “This proposal takes us one step closer to giving the government full control over our health care system—including in the private market. Government intervention of this magnitude leads to restricted access and fewer cures and treatments. It’s the wrong approach for Americans.”
The Legal Road Ahead
The lawsuits brought by the biopharma industry allege that the price negotiation program is unconstitutional, in part because the legislation violates the Fifth Amendment, which states “nor shall private property be taken for public use, without just compensation.”
But the group “will have a heavy lift to convince the courts that these words apply,” said Robin Feldman, a healthcare law expert and professor at University of California College of the Law-San Francisco.
“The state is acting as a purchaser for Medicare,” she told BioSpace. “If the state can decide what it is willing to spend on a pencil or a desk, why not for prescription drugs? To avoid any penalty, a company can choose not to sell the drug to Medicare. Unlike a tax, the company can choose to take its business elsewhere.”
Regardless, the case is most likely headed to the Supreme Court, she said. Looking at historical, textual and other precedents, Feldman argued that patents are not private property for the purposes of the Fifth Amendment’s Compensation Clause.
“The reverence that the founders gave to property like land is worlds apart from what is reflected in the patent clause of the Constitution,” she said. “Patents are limited grants given for the specific purpose of benefiting the public. Applying this clause to patents makes no sense from a patent perspective.
“As the Supreme Court has repeatedly reminded, we grant patents not for the benefit of inventors, but because we believe that creating incentives for inventors will benefit society,” she said. “Thus, patents fall within the notion of a public right, rather than the core, private rights enshrined in the Constitution.”
Feldman said it’s too early to comment on what legal challenges the newly introduced legislation might face because constitutionality so often depends on the final language used.
Potential Industry Fallout
In the meantime, the new bill could further influence the R&D decisions made by biopharma companies. The new legislation might make it impossible for companies like Europe-based Novartis to avoid impacts from the IRA as well as it initially thought.
“We are disappointed in the new policies put forward by some members of Congress that have the potential to further harm patients,” Novartis Director of US External Engagement Michael Meo told BioSpace. “We have begun to see the negative impact that price controls in the IRA are having on research and development decisions for critical new medicines.”
Novartis has already discontinued some early-stage projects because of the IRA, Meo said, although he would not disclose which ones.
On its Q2 earnings call, Novartis CEO Vas Narasimhan said that the company was “carefully looking at assets in terms of potential IRA impact” to ensure it can manage or avoid losing profit. He expressed confidence Novartis’ renal portfolio, in which patient profiles are largely outside of the Medicare population, would not be impacted. But this new legislation, if made into law, would include those younger patient populations as well.
“Rather than expand on a policy that will hurt patients and future innovation,” Meo said, “we would hope that members of Congress would address the harmful, unintended consequences that will result from the IRA.”
Mollie Barnes is a freelance science writer based in Los Angeles. Reach her at mollie@100yearsco.com. Follow her on Threads and Instagram @shejustlikedtogo and see more of her work at molliebarnes.contently.com.
