PhRMA lawsuit challenging IRA price negotiations dismissed on jurisdictional technicality

In a decision that bodes well for the Biden administration’s push to rein in drug prices, a federal judge in Texas has tossed (PDF) a lawsuit from industry lobbying group PhRMA which challenged the legality of Medicare price negotiations as drawn up in the Inflation Reduction Act (IRA).

The ruling comes as several biopharma companies—including Johnson & Johnson, Bristol Myers Squibb, AstraZeneca, Novo Nordisk and Merck—also are contesting the government effort with their own separate lawsuits.

Joining PhRMA in the complaint, which was filed in June of last year, were the Global Colon Cancer Association and the National Infusion Center Association (NICA).

Judge David Ezra dismissed NICA from the case because it “lacked subject matter jurisdiction.” Since NICA was the lawsuit’s lone plaintiff based in Texas, Ezra upheld the government’s claim that the venue was improper and dismissed the case entirely.

“With NICA dismissed, no defendant would reside in this district, and nothing suggests that a substantial part of the events or omissions giving rise to the claim occurred in this district,” Ezra wrote.

Because the case was dismissed “without prejudice,” it could be refiled.

“We are disappointed with the court’s decision, which does not address the merits of our lawsuit and we are weighing our next legal steps,” PhRMA spokesperson Nicole Longo wrote in an email.

PhRMA’s claim was that government pricing negotiations violate due process provisions in the Fifth Amendment. The group also argued that the law's excessive fines for companies that do not comply violate the Eighth Amendment.

Among companies contesting the negotiations, AstraZeneca’s case has progressed the quickest, entering oral arguments earlier this month.

Earlier this month, Medicare sent out its initial offers for 10 drugs designated for negotiations. The negotiations are now underway, and new prices will go into effect in 2026.