As a drugmaker depending heavily on sales of both branded and non-branded products, Teva has said that it is uniquely affected by how medicines are selected for the Medicare drug price negotiation program in the Inflation Reduction Act (IRA).
Two months ago, the company filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS) for how it was implementing the program. And now, several large companies are backing Teva’s effort.
In a proposed amicus brief, Eli Lilly, Johnson & Johnson, Pfizer and Sanofi have added that the CMS “has exceeded its already vast authority under the IRA by promulgating a guidance that sweeps in medications that Congress did not intend to price control.”
The pharma giants argue that the CMS' practice of starting a time clock for drug price negotiation eligibility the moment a particular small molecule or biologic is approved—and making this same timeline apply to all subsequent approvals for products that use the same active ingredient—deprives companies of their chance to gain “competitive returns” for their drugs.
The drugmakers add that this can make it unfeasible to undergo the R&D needed to discover new indications for a previously approved drug.
For each round of IRA negotiations, the CMS considers small molecule drugs that have been approved for at least 7 years. For biologics, the timeline is at least 11 years after original FDA approvals for the negotiations to start.
Negotiated Medicare prices take effect after at least 9 years following FDA licensure for small molecules and 13 years for biologics.
Also supporting Teva’s effort is Bausch and the Biotechnology Innovation Organization (BIO) trade organization.
Also weighing in with a proposed amicus brief is the Association for Accessible Medicines (AAM), which represents manufacturers and distributors of biosimilar and generic medicines. The AAM claims that provisions in the price negotiation program would have “market-distorting effects” on the biosimilar and generic industry.
“CMS’s approach will cause price mandates to displace generic and biosimilar competition,” the AMA said in its brief.
In its original complaint, which it amended last month, Teva claims the price negotiation program is a “fiction” and “upsets the delicate balance between innovation and affordability.” The company argues CMS guidance contradicts key elements of the IRA.
The plaintiffs also argue that the IRA program violates the Administrative Procedure Act and the Due Process Clause of the Fifth Amendment.
For the most part, courts have tossed industry lawsuits challenging the constitutionality of the IRA. Among those who have sued unsuccessfully have been AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Novo Nordisk and industry association PhRMA.