In its latest legal challenge to the Inflation Reduction Act, the U.S. Chamber of Commerce has appealed to a federal court to stop drug price negotiations until ongoing litigation plays out.
Pictured: U.S. Chamber of Commerce/Courtesy of Adobe Stock, lunamarina
On Wednesday, the U.S. Chamber of Commerce filed a motion for preliminary injunction with a U.S. district court in Ohio, aiming to stop the Drug Price Negotiation Program contained in the Inflation Reduction Act while lawsuits against the program play out in federal court. The U.S. Chamber of Commerce is joined by several state chambers of commerce in this latest filing.
“This new price-control scheme provides no guarantee that the manufacturers will even be able to recoup the costs of their investments, much less to ensure a fair return on those investments,” Thomas Quaadman, EVP at the Chamber of Commerce, said in the filing.
The move comes just one day after Merck, the first to sue the Biden administration over the new drug price negotiation paradigm, filed a motion for summary judgment to avoid going to trial.
Original story posted June 12:
Chamber of Commerce Files IRA Lawsuit Against Biden Administration, Follows Merck
Friday, the U.S. Chamber of Commerce filed a lawsuit in federal court against the Department of Health and Human Services and Centers for Medicare & Medicaid Services, challenging the constitutionality of the Inflation Reduction Act’s drug price negotiation program. The business group’s filing comes just three days after a similar lawsuit filed by Merck.
The Chamber of Commerce filing in U.S. District Court in Dayton, Ohio, argues that the IRA violates the Constitution’s “requirements of limited government, property rights, the rule of law, and the separation of powers,” giving the executive branch too much control over drug pricing. The lawsuit also claims that the law would harm innovation and reduce access to drugs for patients.
The business lobby specifically claims the IRA violates the First and Fifth Amendments. The Fifth Amendment states that no “private property be taken for public use, without just compensation.”
As for the First Amendment, the lawsuit states: “This unprecedented regime of price controls and forced sales flouts bedrock principles of separation of powers and nondelegation, exceeds Congress’s enumerated powers, denies pharmaceutical manufacturers due process of law, imposes excessive fines, and compels speech in violation of the First Amendment.”
In its public statement after filing the suit, the Chamber of Commerce charged that the IRA negates fair market competition.
“Despite Congress’s use of the word ‘negotiation,’ the price-setting regime established by the statute is not a voluntary one. The price imposed by the government at the end of the ‘negotiation’ cannot be declined by the manufacturer. The only way to escape the price is to leave the Medicare program altogether, but that cannot be accomplished in time to avoid the government-set price on some sales or the excise tax penalty on others,” the group said.
Still, representatives from the Biden administration promised to push back.
“As the secretary has already made clear, we will vigorously defend the president’s drug price negotiation law, which is already helping to lower health care costs for seniors and people with disabilities, an HHS spokesperson emailed BioSpace. “The law is on our side.”
Not the First, and Maybe Not the Last
Other pharmaceutical companies, including Biogen, said they are also weighing their options following Merck’s Tuesday lawsuit seeking to overturn drug pricing measures in the law.
At the BIO International Convention on Tuesday, Biogen CEO Chris Viehbacher criticized the IRA and said that his company is considering filing a lawsuit, as reported by Fierce Pharma. Viehbacher said that Merck’s suit is a “tiny bombshell compared to the bombshell we got in the industry when the law passed.” He agreed with the language in Merck’s filing, calling the practices forced by the IRA “extortion.”
At the BIO Conference and later in an email statement to BioSpace, Viehbacher said the IRA’s effect on R&D could be significant.
“There’s no question the IRA is going to have an impact on not only the amount of research and development that’s done but where the research and development is done,” Viehbacher said. “I think whenever you hear that ‘this is a negotiation’, it’s not.”
Viehbacher confirmed that Biogen will “look at” potentially filing a lawsuit similar to Merck’s, challenging the law.
The legal challenges to the IRA come as the Biden administration is pushing for drug pricing reform. The administration has proposed allowing Medicare to negotiate drug prices directly with manufacturers, which has been met with opposition from the pharma industry.
The legal challenges to the IRA highlight the ongoing debate over drug pricing in the U.S. While many believe that drug prices in the U.S. are too high, there is disagreement over how to address the issue. Some argue that the government should take a more active role in negotiating drug prices, while others believe that the market should be allowed to determine prices.
The pharmaceutical industry has been vocal in its opposition to the IRA. Industry leaders have criticized the law, saying that it is akin to price controls and that it violates the Constitution. They contend that the law will discourage companies from pursuing research on rare diseases and developing drugs for smaller patient populations.
Pfizer CEO Albert Bourla strongly criticized the plan, calling it “negotiation with a gun to your head,” according to a story by Fierce Pharma. Novartis and Genentech CEOs also publicly criticized the legislation at the BIO conference last week.
Nicole Longo, senior director of public affairs at industry trade group PhRMA, told BioSpace via email that the price controls in the IRA raised a number of concerns for the advocacy organization, including constitutionality claims made by others.
“Patients, providers, biopharmaceutical companies and others have all provided feedback to try to mitigate potential harm, but the administration has taken the most extreme and aggressive approach at every turn,” Longo said. “We will continue to consider every tool available to protect patients and future innovation, which includes potential litigation.”
Milena Izmirlieva, director of life sciences research at GlobalData, said that when the IRA was passed, it was widely expected legal challenges would follow.
“What is happening in the U.S. now is a very gradual change,” she told BioSpace. “It’s starting with a number of products that are going to be impacted, but for the industry, it’s a slippery slope. Once you start going down the route of negotiation, it will be expanded to additional products and, crucially, prices will be made visible.”
She continued, saying that as additional provisions roll out, based on the Affordable Care Act and the IRA as well as in moving toward more universalized health care, “you will inevitably have the motivation to have negotiation because you suddenly have a much greater pressure on the public system via Medicare and Medicaid.”
Update (June 12): This story has been updated to include comment from HHS.
Lisa Munger is a senior editor at BioSpace. You can reach her at lisa.munger@biospace.com. Follow her on LinkedIn.
