PhRMA is suing Biden authorities over Medicare drug negotiations

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The drug industry’s largest lobby group and two other organizations on Wednesday sued the Biden administration over Medicare’s new powers to reduce drug prices for seniors under the Inflation Reduction Act.

Pharmaceutical Research and Manufacturers of America, along with the National Infusion Center Association and the Global Colon Cancer Association, argue in a complaint filed in federal district court in Texas that Medicare’s negotiations with drug manufacturers violate the US Constitution.

PhRMA represents many of the largest drug manufacturers in the world including Eli Lilly, Pfizer And Johnson&Johnson.

The groups asked the court to declare the program unconstitutional and bar the Department of Health from conducting Medicare negotiations without “appropriate procedural protections” for drugmakers.

HHS did not immediately respond to CNBC’s request for comment.

It is the fourth lawsuit against the controversial provision of the Inflation Reduction Act, which went into effect last summer in a major victory for President Joe Biden and Democratic lawmakers.

The policy aims to make drugs more affordable for older Americans, but will likely eat into the drug industry’s profits. Merck And Bristol Myers Squibb — who are also represented by PhRMA — and the US Chamber of Commerce filed separate lawsuits challenging the provision earlier this month.

The latest lawsuit argues that the plan delegates too much authority to HHS.

PhRMA and the two organizations also argue that the provision includes a “crippling” excise tax aimed at forcing drug manufacturers to accept government-dictated drug prices, making it an excessive fine prohibited by the Eighth Amendment .

The lawsuit also argues that the policy violates due process by denying drug companies and the public a say in how Medicare negotiations are implemented.

“The pricing system in the Inflation Reduction Act is bad policy that is jeopardizing further research and development and patient access to medicines,” PhRMA CEO Stephen Ubl said in a statement.

“It also violates the US Constitution because it contains barriers to transparency and accountability, gives the executive branch unlimited discretion in setting drug prices under Medicare, and relies on an absurd enforcement mechanism to enforce compliance,” Ubl said .

The first 10 drugs covered by the provision will be selected in September, with agreed prices taking effect in 2026.

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