PhRMA’s ‘dismissed’ lawsuit against Biden’s Medicare drug price negotiation program revived
While the ruling does not derail the Medicare drug negotiation program, which drugmakers have already agreed to prices for the first 10 drugs selected for the first round, it sends the case back to a lower court for consideration.
While the first round of the Medicare drug negotiations is complete, and the Pharmaceutical Research and Manufacturers of America’s lawsuit filed against the government in 2023 was tossed earlier this year, a federal appeals court in New Orleans reversed the previous dismissal, sending the complaint back to a lower Texas court.
PhRMA asserted the price-setting provisions of the Inflation Reduction Act, which instructed the Centers for Medicare and Medicaid Services in overseeing the Medicare drug price negotiations, were unconstitutional, according to their lawsuit.
The first 10 drugs targeted for drug price negotiations were announced in 2023, and new prices, agreed upon last month with the drug manufacturers, are set to take effect in 2026.
Friday’s ruling, which was handed down by the 5th Circuit Court of Appeals, does not derail the Medicare drug negotiations program, however, the ruling does send the case back for further consideration by the Texas federal district court that tossed it earlier this year. The New Orleans-based 5th Circuit Court found that a Texas judge was wrong to dismiss the case on the grounds that he did not have jurisdiction over the case.
PhRMA, which filed suit along with the Global Colon Cancer Association and the National Infusion Center Association, asserts that Congress lacked constitutional authority to delegate Medicare pricing authority to an executive branch department. “It is no negotiation at all,” the lawsuit said. “It is a government mandate disguised as negotiation. And it is unconstitutional, on several grounds.”
After the IRA authorized Medicare to directly negotiate prices for select medications, a flurry of lawsuits followed brought by the drug manufacturers, although most have found little success. For instance, a federal judge in Delaware in March said that AstraZeneca did not identify a property interest protected by the Constitution that the program threatens.
Related: Judge skeptical of government ‘price setting in PhRMA’s Medicare drug negotiation lawsuit
PhRMA released a statement applauding the ruling: “We are pleased the Fifth Circuit agreed that the merits of our lawsuit challenging the IRA’s drug pricing provisions should be heard.”