Big pharma battle: Chamber of Commerce urges judge to block new drug price program

The dispute over the Medicare drug price negotiation program has moved from a war of words into the courtroom.

The U.S. Chamber of Commerce and the federal government on Friday presented oral arguments before U.S. District Judge Michael Newman in Dayton, Ohio. The program, which was established by the Inflation Reduction Act, aims to save $25 billion annually by 2031 through price negotiations for the drugs that are most costly to Medicare.

Attorney Jeffrey Bucholtz, representing the chamber, argued that the program violates drugmakers’ due process rights by giving the government power to effectively dictate prices for their products. “There is a very, very high risk, maybe a guarantee, but certainly a very, very high risk, that this regime will result in prices that are unfair,” he said.

Bucholtz urged Newman to block the program before October 1, when the makers of the first 10 drugs selected by the U.S. Centers for Medicare & Medicaid Services for inclusion in the program must agree to start negotiations over prices.

Justice Department attorneys countered that the program was far from compulsory and said drugmakers can opt to withdraw their voluntary participation in the Medicare and Medicaid programs. “If they choose not to, that’s their prerogative,” department attorney Brian Netter said. “But under the system that has been devised by Congress, under decades of precedent, there is no judicial recourse at this juncture.”

The government previously has argued that the Chamber of Commerce has no standing to file a lawsuit, because it is not a pharmaceutical company itself and does not meet the standard for suing on behalf of one of its member organizations. Attorneys noted that AbbVie, a member organization that the chamber has cited, was not named as one of the companies that have been asked to negotiate. Pharmacyclics, a subsidiary of Abbvie, has been asked to negotiate, because its leukemia treatment Imbruvica is among the first 10 drugs named.

Chamber attorneys pushed back, arguing that the federal government and CMS in particular historically have treated corporate entities and their subsidiaries as one. The chamber further argued that AbbVie itself already was experiencing financial harm because of the program, and as such talks have not begun yet and any prices that are set through the program will not go into effect until 2026.

Related: Drug price negotiations are on: 5 things to know about the impact on the industry

A common criticism raised by several lawsuits against Medicare negotiation has been that the consequences of not participating leave companies no choice but to engage in a process with which they disagree. Companies that don’t sign agreements to negotiate face possible excise taxes, which attorneys for the chamber said no company would be able to pay, or will have to remove all of their products from Medicare and end their relationship with the lucrative government program.

The government reiterated that the negotiation program is voluntary and that decades of settled precedents have established that providers have no vested interest in future Medicare participation. Newman said he appreciated the “high level of arguments” presented on Friday and acknowledged time constraints in issuing a decision on the request for a preliminary injunction within the next two weeks.