Major pharmaceutical companies are preparing for a second wave of lawsuits against the Biden administration’s Medicare drug pricing negotiation process, according to Pharmaceutical Research and Manufacturers of America (PhRMA) CEO, Stephen Ubl. His remarks to Bloomberg Law signaled that the industry is bracing for what could be an extended legal battle.
The Health and Human Services Department (HHS) is currently defending against nine lawsuits from big players in the pharmaceutical industry, such as Merck & Co. and Bristol-Myers Squibb Co., along with other drugmakers and industry groups, including PhRMA. The lawsuits argue that the Medicare negotiations are unconstitutional, infringing the First, Fifth, and Eighth amendments of the U.S. Constitution.
It appears that future challenges could come in the form of “applied challenges”, asserting specific applications of the drug pricing law, such as a fine instituted or particular aspects of the negotiation process. Ubl’s statements suggest that the pharmaceutical industry is stepping into a phase where the HHS appears to assume an enhanced role in product pricing processes.
Further litigation would follow legal action by AstraZeneca PLC and Boehringer Ingelheim who have already pitted themselves against the HHS. These companies claim the agency breached the Administrative Procedure Act by seeking to establish the drug pricing program through guidance as opposed to a formal regulatory process.
Significantly, there are prominent law firms spearheading the industry’s defense, including King & Spalding and Jones Day. Represented among the legal teams are former Supreme Court clerks, Justice Department officials, and a former solicitor general. With various lawsuits filed across different federal courts, this could potentially induce a circuit split and pressure the U.S. Supreme Court into arbitrating the case.
With an escalating legal battle on the horizon, PhRMA is preparing to engage both in-house and external legal expertise. This arrives as the Centers for Medicare & Medicaid Services bolster their teams to implement the drug pricing law.