Jun 21, 2023 - Health

PhRMA sues over Medicare drug pricing provisions

Illustration of a price tag in the shape of a red cross

Illustration: Sarah Grillo/Axios

Pharmaceutical Research and Manufacturers of America announced Wednesday it is suing the Biden administration over its signature measure to lower drug prices, calling it unconstitutional.

Why it matters: The move is an escalation in the pharmaceutical industry's battle against the law, which allows Medicare to negotiate prices on some drugs, and could be a hurdle for the provisions implementing lower drug prices from going into effect.

What they're saying: "This is not negotiation," PhRMA CEO Steve Ubl told reporters, saying the provisions are so burdensome they are actually just "price-setting" and put "access to innovative medicines at risk."

Driving the news: The lawsuit argues the law is unconstitutional on several grounds:

  • It's a violation of separation of powers by delegating too much authority to the Department of Health and Human Services.
  • It violates due process by denying drug companies input into the process.
  • It violates the Eighth Amendment's ban on "excessive" fines, given the heavy excise tax companies have to pay if they refuse to negotiate.
  • Axios has reached out to the White House and HHS for comment and will update this story if they respond.

Between the lines: The lawsuit was filed in the Western District of Texas, where PhRMA's partner in the lawsuit, the National Infusion Center Association, is located. The Global Colon Cancer Association also joined.

  • The suit follows other legal challenges, including from Merck and Bristol Myers Squibb.
  • The White House pushed back on the Merck suit earlier this month by saying "there is nothing in the Constitution that prevents Medicare from negotiating lower drug prices.”
  • PhRMA is seeking to have a court require more input in the negotiation process and to prevent enforcement of the excise tax penalty.
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