The pharmaceutical industry, which suffered a crushing defeat last year when President Biden signed into law a bill that would allow Medicare to negotiate the prices of some prescription drugs, is mounting a broad attack on the bill just as negotiations are about to begin.
The law, the Suppression of Inflation Act, represents a legislative achievement for Mr. Biden, who has boasted of winning against the pharmaceutical industry. Medicare is a federal health insurance program for the elderly and disabled. Provisions that allow price negotiations are expected to ease the burden on governments. Estimated $98.5 billion For more than a decade, it has reduced premiums and out-of-pocket costs for many older Americans.
on tuesday, Johnson & Johnson became the latest pharmaceutical company to take the Biden administration to federal court to stop its drug pricing program. 3 other pharmaceutical companies — Merck, Bristol-Myers Squibb and Astellas Pharma — They are suing themselves as well. Industry major trade associations and the US Chamber of Commerce.
The lawsuit makes similar duplicate allegations that drug pricing rules are unconstitutional. They dot federal courts across the country, and experts say the tactic increases the industry’s chances of winning conflicting rulings and can lead legal challenges to faster, business-friendly submissions to the Supreme Court.
The legal push comes just weeks before the Centers for Medicare and Medicaid Services are scheduled to release the long-awaited list of the first 10 drugs to be negotiated. The list will be announced by September 1st. Manufacturers of selected drugs have until October 1 to declare whether they want to join the negotiations or face hefty fines. The price cut will not apply until 2026.
Earlier this month, the court asked a federal judge in Ohio to issue an injunction blocking any pending negotiations.
Lawrence O. Gostin, a public health law expert at Georgetown University, said the Supreme Court may be sympathetic to some of the industry’s arguments. In particular, he pointed to pharmaceutical companies’ claims that by requiring them to negotiate and pay fines, they violate the Fifth Amendment to the U.S. Constitution, which prohibits the acquisition of private property for public use without due compensation.
“The Supreme Court is openly hostile to what it sees as violations of the Fifth Amendment,” Gostin said, adding, “I wouldn’t be surprised at all if these cases were brought to the Supreme Court and decided by the Supreme Court.”
For Biden and his fellow Democrats, it will hurt. The president and Democrats have campaigned for years to lower drug prices and plan to make it a central theme of their 2024 campaign. White House press secretary Carine Jean-Pierre said in a statement that Biden is confident the administration will win in court.
“Pharmaceutical groups have blocked efforts to allow Medicare to negotiate lower drug prices for decades,” she said. “President Biden is proud to be the first president to beat them.”
Republicans opposed drug pricing, viewing it as a form of government price control. But the politics of this issue are dangerous to them. Republican health policy strategist Joel White said it would be difficult for Republicans to defend the industry because so many Americans are concerned about high drug prices.
Instead, Republicans are focusing on scrutinizing another pharmaceutical industry priority: the practices of pharmacy benefits managers who negotiate prices with drug companies on behalf of health insurance. Pharmaceutical companies allege that pharmacy benefits managers are contributing to higher prescription drug prices by taking a cut from middlemen.
For pharmaceutical companies, the risk of legal challenge is greater than just doing business with their largest customer, Medicare. The industry is concerned that Medicare will set the standard for virtually all payers, and that the government’s low price announcements will give pharmacy benefit managers, who negotiate on behalf of private insureds, more leverage to demand further discounts.
The pharmaceutical industry has launched a public relations offensive in conjunction with a legal campaign. The industry group that filed one of the lawsuits, U.S. Pharmaceutical Research and Manufacturers, known as PhRMA, said: Advertisement Targeted at pharmacy benefits managers, industry executives publicly argue that drug pricing will lead to fewer treatments. The meaning is clear. Lower prices mean lower revenues, discouraging companies from developing certain drugs.
“We can’t extract hundreds of billions of dollars from the pharmaceutical industry, and we can’t help but hope that it will have a real impact on the industry’s ability to develop new treatments and treatments,” said Robert Zilkelbach, PhRMA executive vice president.he quoted analysis It was funded by pharmaceutical company Gilead Sciences, which claimed the industry would lose $455 billion over seven years if the companies negotiated with Medicare.
the study released last month The organization, which is funded by another industry group, the Biotechnology and Innovation Agency, warned that pricing would stifle innovation, resulting in 139 fewer drug approvals over the next decade.
However, this assessment contradicts an analysis by the Congressional Budget Office, which estimates that the act will reduce drug approvals by just one over the next 10 years and about 13 over the next 30 years.
In addition, many new drugs “do not offer clinically meaningful benefits over existing drugs,” said Amet Sarpatwari, a pharmaceutical policy expert at Harvard Medical School. He said the Inflation Control Act, which requires governments to consider the clinical benefits of drugs when determining the price Medicare pays, may encourage companies to focus more on breakthrough treatments rather than so-called “me-too drugs.”
Until now, Medicare has been explicitly prohibited from negotiating prices directly with pharmaceutical companies. This condition was demanded by the industry in exchange for helping create Part D, the Medicare prescription drug program enacted by President George W. Bush 20 years ago.
Under the Control Inflation Act, the government will select an initial set of 10 drugs for which prices will be negotiated, based on Part D program spending. More drugs will be added in the next few years.
experts expect The first drug list that includes commonly prescribed drugs such as the anticoagulants Eliquis and Xarelto. Anticancer drugs such as Imbruvica and Xtandi. Symbicort treats asthma and chronic obstructive disorder. Enbrel is used for rheumatoid arthritis and other autoimmune diseases.
Medicare already pays discounted prices for these medicines. In 2021, the most recent year for which data are available, Medicare spent about $4,000 per patient on Eliquis and Xarelto, compared with a list price of $6,000 a year at the time. This low price reflects discounts drawn from pharmaceutical companies by pharmacy benefits managers negotiating on behalf of private companies contracted by the government to manage Part D plans.
But those negotiations are opaque and would cut Medicare spending only marginally. The rationale behind the Suppress Inflation Act’s drug pricing provisions is that Medicare covers so many people that its leverage can be used to extract even steeper discounts.
The United States spends more per capita on drugs than comparable countries, partly because other countries have aggressive drug pricing controls. Surveys show that many Americans avoid taking drugs because they can’t afford them.
Experts say the Medicare bargaining program is likely to lead to direct savings for seniors, initially in the form of lower premiums due to lower drug spending. And when lower prices for medicines administered in clinics and hospitals under a separate Medicare program known as Part B take effect in 2028, it could lower out-of-pocket costs for traditional Medicare-covered seniors who don’t have additional coverage.
Proponents of the anti-inflation law say the negotiations will not only save the government and patients money, but also bring much-needed transparency to the complex process of drug pricing. If companies don’t negotiate, they will have to pay hefty excise taxes or withdraw all drugs from both Medicare and Medicaid.
“This is not a ‘negotiation,'” Merck said in its complaint. “It’s tantamount to blackmail.”
Taken together, these lawsuits make a variety of constitutional claims. They include allegations that the government violates the Fifth Amendment by unfairly expropriating property, as well as allegations that the law violates the First Amendment by having pharmaceutical companies agree in writing to negotiate a “fair price.” Another argument is that excise taxes amount to excessive fines prohibited by the Eighth Amendment.
“If the government can impose price controls in this way on pharmaceutical companies, it could do the same for any sector of our economy,” said Jennifer Dickey, deputy chief counsel for the Chamber’s legal department.
Biden administration officials say there is nothing enforceable about the law. They argue that companies are free not to negotiate and can issue news releases or other public statements that disagree with negotiated prices. And they point out that the government is regularly negotiating the purchase of other products, and that the Department of Veterans Affairs is already negotiating drug prices with pharmaceutical companies.
“For me, Medicare is doing what it’s supposed to do,” said Gostin, a professor at Georgetown University. “The company is a huge buyer of the product and basically uses its influence and bargaining power to get the best price.”
The pharmaceutical industry is “throwing the kitchen sink at the government,” he added. “They are looking for what sticks and their arguments are going directly to the Supreme Court.”
