The United States Department of Health and Human Services (HHS) finds itself on a potential legal minefield following the announcement of the first ten drugs covered under its Medicare Part D price negotiation program. Pharmaceutical giant, Novartis, threw down the legal gauntlet last Friday, making it the seventh drugmaker to contest the program. It is also likely to face more lawsuits from manufacturers of the named drugs, according to industry experts.
The Medicare drug pricing negotiation program is part of the Biden administration’s broader drug pricing reform plan, which aims to save $25 billion annually by 2031 by negotiating Medicare price tags for the costliest medicines. The ten-drug list announced by the HHS accounted for $50.5 billion, comprising 20% of the total Part D gross covered prescription drug costs between June 1, 2022, and May 31, 2023. Expenses paid out of pocket by Medicare beneficiaries for these same drugs came to $3.4 billion in 2022.
Alongside Novartis, pharmaceutical firms Astellas, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Johnson & Johnson and Merck are embroiled in legal action against the program.
Companies like Amgen, Eli Lilly, Novo Nordisk, and Pfizer, with drugs also included in the list, haven’t yet launched lawsuits against the negotiation plan, but legal experts speculate that suits from these mentioned companies are imminent, as reported by Bloomberg.
Trade organisations such as the U.S. Chamber of Commerce and the Pharmaceutical Research and Manufacturers of America (PhRMA) are also litigating the HHS over the price negotiation plan, together with joint complaints filed by the National Infusion Center Association and the Global Colon Cancer Association.
Novartis is arguing that the government’s pricing plan is unconstitutional. It alleges that the drug pricing provisions embody an unconstitutional seizing of pharmaceutical manufacturers’ private property and would inflict steep fines on any company that declines to participate in the supposedly voluntary negotiations or accept the proposed ‘maximum fair price’ for a specific medication. The company also argues the provisions force it to support views it strongly disagrees with, violating its First Amendment rights.
In an interview with MedCity News, healthcare law expert Robin Feldman stated that plaintiffs challenging the drug price negotiation plan could face a ‘heavy lift’ to convince courts of its alleged unconstitutionality. However, she acknowledged that these lawsuits, likely intended to reach the Supreme Court, could delay the government’s price negotiation powers.
In the impending legal battles, firms with drugs included on the list will likely adjust their lawsuits to detail the financial effects more specifically, an approach that legal experts predict might strengthen their case.