Medicare’s 1st-ever drug price negotiations are about to begin, as legal battles persist
On Feb. 1, the CMS will send its initial offer of a fair price for each of the 10 selected prescription drugs to the drugmakers, who have all filed lawsuits attempting to block the government’s effort to control drug prices.
With the federal government’s negotiation of prescription prices with drug companies about to get underway, briefs filed in suits seeking to overturn the program are providing a preview of the coming legal battle.
A plan to negotiate prices of prescription drugs covered under Medicare is facing multiple lawsuits from drugmakers, including at least four cases in New Jersey.
Bristol-Myers Squibb Co., Janssen Pharmaceuticals, Novartis Pharmaceuticals Corp. and Novo Nordisk have challenged the drug negotiation program in suits naming Health and Human Services Secretary Xavier Becerra.
Those cases are pending before U.S. District Judge Zahid Quraishi.
In each of the four cases before Qaraishi, the drug company plaintiffs have filed motions for summary judgment, asking the court to strike down the program.
The drug price negotiation program was announced as an element of President Joe Biden’s Inflation Reduction Act.
But drug companies say it will reduce innovation and make it harder for patients to access medicines.
The drug companies have called out heavy hitters in their challenges to the price negotiation program: Novartis is represented by Latham & Watkins, Janssen has Covington & Burling, Bristol-Myers is represented by Jones Day and Novo Nordisk is using King & Spalding.
Arguments of the drug companies are refuted in some of the motions. One group rejected a free speech defense, while a second group of legal scholars disputed a claim that government negotiation of drug prices violates the Takings Clause.
Bristol-Myers and Janssen claim that the operative terms in a contract they must sign to participate in the Medicare program should be considered compelled speech that violates their rights under the First Amendment. But the Abrams Institute for Free Expression at Yale Law School disputed that assertion.
“This is an extraordinarily troubling claim because a price-setting contract is a regulation of conduct, not speech, and the contract at issue here contains no mandated pledge or affirmation that drug manufacturers must embrace. It memorializes the obligations being assumed by the contracting parties utilizing statutory terms as defined by Congress, and it does so without mandating or limiting the speech of drug manufacturers to any extent,” the Abrams brief said.
“Plaintiffs seek to stretch the compelled speech doctrine far beyond the types of government obligations it precludes,” the brief said.
Meanwhile, on Feb. 1 the Centers for Medicare and Medicaid Services will send its initial offer of a fair price for each of 10 popular prescription drugs. Negotiation will run through Aug. 1 and on Sept. 1 the maximum fair prices will be announced, according to CMS.
In other amicus briefs, a panel of nine nationally recognized experts in Medicare and medical finance said that Congress has long afforded the Department of Health and Human Services broad authority to negotiate prices Medicare will pay for health care services other than drugs. The panel also said courts have consistently rejected challenges to federal health care programs that seek to limit costs.
Another group of 48 legal scholars submitted an amicus curiae brief saying that the drug companies’ core claim in the case—that the federal government should not be allowed to negotiate drug prices—contradicts a century of precedent and would jeopardize Medicare and Medicaid. The government routinely negotiates for drugs as well as other goods and services, and Congress has the authority to directly regulate drug prices.
Amicus Fresenius Kabi USA, the American branch of a German maker of drugs and health care products, said in its brief that the government’s IRA would negatively impact the availability of generic and biosimilar drugs by undermining incentives to develop new products.
Related: Drug price negotiations are on: 5 things to know about the impact on the industry
Fresenius Kabi, represented by ArentFox Schiff and Newark’s Robinson Miller, said in a brief that the IRA would create “unreasonable pricing pressure” in the drug market, which would reduce the incentive for generic and biosimilar companies to pursue existing products. That could cause generic and biosimilar drugmakers to “exit the industry,” leading to increased drug shortages and fewer low-cost options for drugs in the private market, the company said.
The AARP, an advocacy group for older adults, said stopping the government’s plan to negotiate drug prices would prevent millions of people from accessing the medications they need. In addition, the AARP said the negotiation program will protect the financial integrity of Medicare and save taxpayers billions of dollars.
Five health care-related groups—the American Public Health Association, the American College of Physicians, the Society of General Internal Medicine, the American Geriatrics Society and the American Society of Hematology—issued a joint amicus brief stating that the country’s high drug prices have “substantial and escalating negative effects on public health and patient outcomes.”
The group of health care organizations cited research in its brief that said negotiating drug prices is unlikely to have a major negative impact on drug availability.