Pharma Poised to Intensify Legal Battle Over Drug Price Negotiations

The empire strikes back.

By Eric Gardner, More Perfect Union

Pharmaceutical companies are expected to escalate their ongoing legal war against the Biden administration's Medicare drug pricing negotiations, potentially threatening a decades-in-the-making policy shift to lower the cost of drugs for millions of American seniors. “There is likely to be a second wave (of lawsuits),” said Stephen Ubi, the CEO of the industry-leading lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA) in a conversation with Bloomberg Law.

The second wave would join nine different lawsuits already filed by pharmaceutical manufacturers and lobbying groups since the Inflation Reduction Act, which was passed in the summer of 2022, gave Medicare the ability to negotiate the price of 10 drugs. The drugs include medication for heart disease, diabetes, cancer, and more. The government estimates negotiation will save taxpayers almost $100 billion over the next ten years. 

The first wave of lawsuits generally argued that allowing Medicare to negotiate prices amounts to a violation of constitutional rights, including the right to free speech. 

Ubi speculated that the second wave of lawsuits will focus on “the application” of the law—namely, the process and bureaucracy around the negotiations.

PhRMA and the U.S. Chamber of Commerce have already filed lawsuits in that direction, arguing that the legislation violates the “nondelegation doctrine,” a judicial idea that bars Congress from transferring its legislative duties to administrative bodies like CMS (the administrator of Medicare). AstraZeneca and Boehringer Ingelheim have filed similar administrative-focused lawsuits.

Generally, most legal experts doubt the pharmaceutical industry's legal logic. “Precedent should foreclose any nondelegation-doctrine-based theory against the IRA,” Georgetown University’s Andrew Twinamatisko and Zachary Baron wrote in their analysis of the lawsuits. 

At the same time, they noted that “it is possible that some of these strategically filed lawsuits may find sympathetic judges.” This seems to be the overarching goal of the industry’s legal onslaught. 

Legal experts believe the drug industry is trying to generate a "circuit split," where different lower courts deliver conflicting rulings on the same legal question. This increases the likelihood of attracting Supreme Court attention for a final resolution. To increase their chances of success, they file the suits in districts sympathetic to their argument, often by overlapping law firms. Anti-abortion rights activists have used a similar strategy in an attempt to block access to medication abortion.

“They're looking for judges that will be friendly to their case, and they're hoping to get it to the Supreme Court,” Peter Maybarduk, the Director of Public Citizen’s Access to Medicines group, said in an interview.  “Maybe they get lucky,” Maybarduk concluded. The new round of lawsuits seems to be just another theory, another shot at upending the legislation.

“The industry,” Georgetown’s Twinamatisko and Baron concluded, “will rely on every plausible theory to derail this landmark legislation.”

Our latest video unpacks these developments in the context of the pharmaceutical industry’s 20-year battle to ensure that the United States remains its most lucrative market in the world, regardless of the economic pain it inflicts on millions. Watch it here: