The Pharmaceutical Research and Manufacturers of America, or PhRMA, filed a lawsuit against the Biden administration on Wednesday, arguing that the drug price-setting provisions of the Inflation Reduction Act are unconstitutional and violate the civil liberties of drug companies.
“The price setting scheme in the Inflation Reduction Act is bad policy that threatens continued research and development and patients’ access to medicines,” PhRMA President and CEO Stephen Ubl said. “It also violates the U.S. Constitution because it includes barriers to transparency and accountability, hands the executive branch unfettered discretion to set the price of medicines in Medicare, and relies on an absurd enforcement mechanism to force compliance.”
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The drug pricing provisions of the Inflation Reduction Act grant the Health and Human Services secretary authority to set maximum fair prices for 10 medicines covered by Medicare after a compelled negotiation process with drug manufacturers. Under the Inflation Reduction Act, compliance with government-set prices is enforced by excise taxes and monetary penalties of up to 95% of the total revenues per drug on the list.
PhRMA is joined by the National Infusion Center Association and the Global Colon Cancer Association in asking for the U.S. District Court for the Western District of Texas to enjoin the Department of Health and Human Services from implementing both the price-negotiating mechanism and the corresponding enforcement taxes and penalties.
The lawsuit argues the Inflation Reduction Act violates the company’s due process rights, as well as constitutional protections against excessive fines.
The three parties also contended the law violates the separation of powers because it “impermissibly delegated broad authority to HHS to set prices within Medicare with no meaningful constraints on the agency’s exercise of this new price-setting authority.”
Earlier this month, the pharmaceutical giant Merck filed a similar lawsuit against HHS, contending that artificially lowering prices will hinder critical research and development.
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Andrew Spiegel, executive director of the GCCA, said the Inflation Reduction Act will “thwart the progress we have made and lead to less hope for patients battling [colon cancer]” and does so without giving patients a “real seat at the table.”
President of the liberal advocacy group Public Citizen Robert Weissman said the Merck lawsuit was only “a desperate attempt by the industry to beat back popular legislation that would curtail Big Pharma’s ability to price gouge Medicare and secure monopoly profits.”