PhRMA sues Biden administration over Medicare drug negotiations

Traders work on the ground of the Latest York Stock Exchange during morning trading, April 10, 2023.

Michael M. Santiago | Getty Images

The pharmaceutical industry’s largest lobbying group and two other organizations Wednesday sued the Biden administration over Medicare’s latest powers to slash drug prices for seniors under the Inflation Reduction Act. 

Pharmaceutical Research and Manufacturers of America, together with the National Infusion Center Association and the Global Colon Cancer Association, argue that the Medicare negotiations with drugmakers violate the U.S. Structure, in a grievance filed in federal district court in Texas. 

PhRMA represents lots of the most important drugmakers on this planet, including Eli Lilly, Pfizer and Johnson & Johnson. 

The groups asked the court to declare this system unconstitutional and forestall the Department of Health and Human Services from implementing Medicare negotiations without “adequate procedural protections” for drug manufacturers. 

HHS didn’t immediately reply to CNBC’s request for comment. 

It marks the fourth lawsuit difficult the controversial provision of the Inflation Reduction Act, which became law last summer in a significant victory for President Joe Biden and Democratic lawmakers.

The policy goals to make drugs cheaper for older Americans but will likely reduce pharmaceutical industry profits. Merck and Bristol Myers Squibb — who’re also represented by PhRMA — and the U.S. Chamber of Commerce filed separate lawsuits against the supply earlier this month. 

The most recent lawsuit argues the plan delegates an excessive amount of authority to the HHS.

PhRMA and the 2 organizations also argue that the supply features a “crippling” excise tax aimed toward forcing drugmakers to simply accept the government-dictated price of medicines, making it an excessive wonderful prohibited by the Eighth Amendment. 

The lawsuit also argues the policy violates due process by denying pharmaceutical corporations and the general public input on how Medicare negotiations will likely be implemented. 

“The value setting scheme within the Inflation Reduction Act is bad policy that threatens continued research and development and patients’ access to medicines,” PhRMA CEO Stephen Ubl said in a press release. 

“It also violates the U.S. Structure since it includes barriers to transparency and accountability, hands the manager branch unfettered discretion to set the worth of medicines in Medicare and relies on an absurd enforcement mechanism to force compliance,” Ubl said.

The primary 10 drugs the supply applies to will likely be chosen in September, with the agreed prices taking effect in 2026.