Legal battle over drug negotiations could collide with 2024 race

Driving the news: A federal judge in Ohio on Friday will hear oral arguments on the U.S. Chamber of Commerce's request to halt the program before Oct. 1, the deadline for companies to agree to Medicare negotiations on the first 10 selected drugs.

The Biden administration and the Chamber are expected to clash over when exactly drug companies will face "harm" from the Inflation Reduction Act program.

• That will be a key question for judges across the country who are handling seven other lawsuits from drugmakers and a leading industry group.
• Only the Chamber so far has asked for a preliminary injunction, while other plaintiffs have asked for a summary judgment against the program without a trial.
• It only takes one nationwide injunction to pause the Biden administration's implementation of the program, although the administration would certainly appeal such a ruling.
• Analysts closely watching these cases said plaintiffs could have a stronger case for halting the program next summer, just before Medicare will announce negotiated prices — and in the height of the presidential campaign.

Details: The judge presiding over the Chamber's lawsuit is Michael Newman, a Trump appointee who was assigned to the case after a different judge recused himself earlier this month.

• The Chamber, in its request for an injunction, said the IRA already has and will continue to cause its members "unrecoverable economic losses."
• The Department of Justice, which contends the Chamber doesn't have legal standing to challenge the program, said the court should throw out the case because any financial injury to drug companies wouldn't happen until 2026, when the negotiated prices will take effect.

Between the lines: It's hard to predict how these overlapping challenges might play out.

Notably, some lawsuits were filed in parts of the country where there's a better chance drug companies draw a sympathetic panel of appellate court judges. And the Supreme Court could also ultimately become involved.

• "There could be a little bit of a bump in the road and noise and conflicting injunctions, but ultimately the Supreme Court will determine whether an injunction takes effect," said Nick Bagley, a law professor at the University of Michigan who is supportive of the law.
• "At the end of the day, [drug companies are] just not harmed until they're paid less for their drug, which isn't going to happen for a few years," he added.

Yes, but: The Sept. 1 deadline for Medicare to announce the negotiated prices could serve as an important legal flashpoint. That could bolster drug companies' argument that they're being harmed before prices take effect, said Raymond James analyst Chris Meekins.

• Meekins in an investor note yesterday said he's expecting at least some delay in implementation and the possibility that the Supreme Court strikes down negotiations entirely.
• Bagley, on the other hand, said that the question of the program's constitutionality, rather than implementation deadlines, may end up being more relevant to a judge sympathetic to the drug companies' arguments.
• The Biden administration, which previewed its legal defense of drug negotiations earlier this week, has expressed confidence that courts will uphold the program.

Zachary Baron, a Georgetown University health law expert, said political optics will hang over any court considering whether to halt the program.

• "Part of the question in this upcoming year is, if you're a district court judge or you're in the 5th Circuit or the 6th Circuit, in the run-up to a presidential election, do you want to be seen as blocking this drug negotiation program that has widespread public support, per polling, or do you want to let this litigation process proceed," Baron said.

The bottom line: How the legal process plays out ahead of the 2024 election could either bolster or undermine Biden's talking points on an issue popular with voters.

• Bagley argued that an even injunction could give Biden a political boost.
• "An injunction like that is a big fat sloppy wet kiss for Joe Biden. That's not how it'll be viewed at first, but it's an opportunity for him to rail against the courts," Bagley said.
• "Even if there's a bad outcome at an intermediate stage, it puts the focus on something Joe Biden wants to talk about."