The Justice Department has gained a new ally in its quest to knock down a lawsuit from the U.S. Chamber of Commerce challenging “illegal price controls” in the Inflation Reduction Act (IRA).
Late last week, AARP and AARP Foundation filed an amicus brief (PDF) in the U.S. District Court for the Southern District of Ohio. In the filing, the groups urge the court to dismiss the Chamber’s bid to block Medicare’s new authority to negotiate lower prescription drug prices.
In July, the Chamber of Commerce joined several drugmakers—and the pharma trade group PhRMA—in filing legal challenges to the IRA. The Chamber also sought a preliminary injunction in hopes of stopping the negotiation program in its tracks.
The Chamber argues that price negotiation provisions in the IRA “violate fundamental protections for free enterprise enshrined in our Constitution.”
But to hear AARP tell it, stopping the drug price negotiations before they even begin “is not in the public interest.”
“On the contrary, it will only reinforce the substantial harm that the IRA is meant to prevent,” the amicus brief states. “It would protect the pharmaceutical industry’s unreasonable and astronomical profits at the expense of what people with chronic conditions need to survive.”
The brief goes on to suggest that negotiations should proceed as scheduled, both to benefit patients and to “stop Medicare and taxpayers from losing billions of dollars from unjustified prescription drug prices.”
So far, major drugmakers like Johnson & Johnson, Merck, Bristol Myers Squibb and Astellas have filed lawsuits arguing Medicare price negotiations would violate the First and Fifth Amendments of the U.S. Constitution. PhRMA, for its part, hopped on the litigation bandwagon in June. PhRMA's lawsuit claims that the IRA’s excise tax, imposed on any drugmaker that doesn’t comply with Medicare’s price-setting negotiations, violates the Eighth Amendment’s Excessive Fines Clause.
The Chamber of Commerce, meanwhile, contends that despite IRA's use of the term negotiation, "the price-setting regime established by the statute is not a voluntary one."
"The price imposed by the government at the end of the 'negotiation' cannot be declined by the manufacturer," the Chamber said in a recent press release. "The only way to escape the price is to leave the Medicare program altogether, but that cannot be accomplished in time to avoid the government-set price on some sales or the excise tax penalty on others."
For its part, the Department of Justice recently argued the framework of the law 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 recent motion.
Some IRA prescription drug provisions have already rolled out ahead of the negotiation portion of the bill, which doesn't go into effect until 2026. For instance, IRA has already capped out-of-pocket costs for insulin for people with Medicare to just $35 per month.
This year, IRA will also require drug companies to pay rebates to Medicare if their prices rise faster than the rate of inflation. And in 2024, the law will cap out-of-pocket spending for Medicare Part D enrollees alongside other Part D benefit design changes.
As for the negotiation measure, officials are set to release the list of drugs eligible for the first negotiations early next month.