It’s been exactly one year since President Joe Biden signed the Inflation Reduction Act (IRA) and in less than a month, the Center for Medicare & Medicaid Services (CMS) will release its initial list of drugs subject to Medicare pricing negotiations come 2026.
After last summer’s industry lobbying efforts against IRA fell flat, “manufacturers and interest groups have run to court, filing multiple suits around the country challenging the statute on its face,” the U.S. Department of Justice (DOJ) said in a recent court filing.
For instance, last month, the U.S. Chamber of Commerce joined several drugmakers and the pharma trade group PhRMA in filing its own lawsuit challenging “illegal price controls” in the IRA. The chamber also sought a preliminary injunction in a bid to stop the program in its tracks.
In a new filing late last week, the DOJ called that injunction effort pointless because the normal course of litigation would likely conclude before the pricing controls take effect in 2026.
Like with other IRA lawsuits, the chamber’s case argues the Medicare pricing negotiation program violates the U.S. Constitution. The chamber takes issue with the “negotiation” classification, instead calling it an “unprecedented, one-sided regime.”
But according to the DOJ, the framework technically does offer drugmakers a choice. A company can simply “sell its wares at prices a buyer is willing to pay, or it can take its business elsewhere,” the DOJ’s attorneys wrote in a Friday motion to dismiss the chamber’s case.
The DOJ also argued the chamber relies on several uncertainties in making its case. Lawyers from the government told the court the case should be tossed.
But as the chamber sees it, the “Orwellian” pricing scheme could have broader future implications in stemming free enterprise and competitiveness.
“If Congress is allowed to do this to the pharmaceutical industry, who will be next?” the organization argued in its own filing.
Aside from the chamber, drugmakers such as Merck, Bristol Myers Squibb and Johnson & Johnson have challenged the law in court. The industry’s top trade group PhRMA also filed its own case.
As the litigation plays out, the actual Medicare price negotiations get closer. On Sept. 1, the CMS is set to release the list of drugs set to face Medicare price negotiations starting in 2026. The list is expected to feature some of the biggest names in the industry, including Merck’s Januvia, AbbVie’s Imbruvica and Eli Lilly’s Trulicity.
Aside from Medicare pricing negotiations, the IRA allows the government to impose financial penalties for companies that raise prices faster than the rate of inflation, among other measures. President Joe Biden signed the bill into law last August.