After Merck and Bristol Myers Squibb took shots at the Inflation Reduction Act (IRA) in separate lawsuits, influential trade group Pharmaceutical Research and Manufacturers of America (PhRMA)—plus two other organizations—have stepped up to the plate with their own case.
PhRMA, along with the Global Colon Cancer Association and the National Infusion Center Association, claim that the IRA is unconstitutional in a lawsuit (PDF) against the Department of Health and Human Services (HHS) and its secretary Xavier Becerra. The lawsuit also names the Centers for Medicare & Medicaid Services and its administrator Chiquita Brooks-LaSure.
While Merck and BMS claimed violations of the First and Fifth amendments with their respective lawsuits, the new case takes a bit of a different approach, raising new arguments over the Eighth Amendment.
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 new law forces a tax that starts at 186% of a drug’s annual revenue and increases to a maximum of 1,900% for noncompliance, essentially functioning “as a penalty that is grossly disproportionate to the 'offense' it seeks to punish,” the groups argue in their suit.
PhRMA and the other groups also raised arguments over the Fifth Amendment’s Due Process Clause, which is typically used in criminal procedures. They argue that the IRA breaches the clause by denying public input on how the law will be implemented.
Additionally, the lawsuit cries foul on the broad authority Congress delegated to the HHS to set these prices, calling the action in conflict with the Constitution’s separation-of-powers principles.
After PhRMA filed the suit, Senate Finance Committee Chair Ron Wyden, D-Oregon, quickly took to the new law's defense.
“It’s no surprise that Big Pharma wants to stop Medicare from negotiating lower drug prices on behalf of American seniors,” Wyden said in a statement. “I expect the Biden Administration to vigorously defend Medicare’s bargaining power so seniors will see the lower drug prices they expect."
As the bill moved through Congress last summer, PhRMA voiced its complaints and pledged to explore “every opportunity,” including legislative, regulatory and legal, to counter the program, spokesperson Sarah Sutton told Fierce Pharma at the time.
BMS filed its lawsuit on Tuesday, using a different Fifth Amendment argument and citing the First Amendment. Merck also claimed violations of the First and Fifth amendments in its first-of-a-kind suit.