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PhRMA joins the legal battle over the "price-setting" measures in the Inflation Reduction Act

PhRMA joins the legal battle over the price-setting measures in the Inflation Reduction Act.
Source: fiercepharma.com

Influential trade group Pharmaceutical Research and Manufacturers of America (PhRMA) and two additional organizations have stepped up to the plate with their own cases following Merck and Bristol-Myers Squibb's separate lawsuits against the Inflation Reduction Act (IRA).


In a lawsuit (PDF) filed against the Department of Health and Human Services (HHS) and its secretary, Xavier Becerra, PhRMA, the Global Colon Cancer Association, and the National Infusion Center Association assert that the IRA is unconstitutional. Chiquita Brooks-LaSure, the administrator of the Centers for Medicare & Medicaid Services, is also mentioned in the lawsuit.


In their respective lawsuits, Merck and BMS claimed violations of the First and Fifth Amendments. However, the new case takes a slightly different approach and raises new arguments regarding the Eighth Amendment.


The lawsuit filed by PhRMA asserts that the Eighth Amendment's Excessive Fines Clause is infringed upon by the IRA's excise tax, which is levied on any pharmaceutical company that does not comply with Medicare's price-setting negotiations. The groups argue in their lawsuit that the new law imposes a tax that is "as a penalty that is grossly disproportionate to the 'offense' it seeks to punish" and starts at 186% of a drug's annual revenue and can reach 1,900% for noncompliance.


PhRMA and the other groups also argued about the Due Process Clause of the Fifth Amendment, which is typically used in criminal proceedings. By refusing public input on how the law will be implemented, they argue, the IRA violates the clause.


Also, the lawsuit says that HHS has too much power from Congress to set these prices, which goes against the separation of powers principles in the Constitution.


Ron Wyden, D-Oregon, chair of the Senate Finance Committee, quickly defended the new law after PhRMA filed the suit.


Wyden stated in a statement, "It's no surprise that Big Pharma wants to stop Medicare from negotiating lower drug prices on behalf of American seniors." I anticipate the Biden Administration vigorously defending Medicare's bargaining power in order to ensure that seniors receive the anticipated reduction in drug costs.


Sarah Sutton, a spokesperson for PhRMA at the time, told Fierce Pharma that the organization pledged to investigate "every opportunity," including legislative, regulatory, and legal ones, to counter the program as the bill moved through Congress last summer.


BMS used a different Fifth Amendment argument and cited the First Amendment when it filed its lawsuit on Tuesday. In its first-of-its-kind lawsuit, Merck also claimed that the First and Fifth Amendments were broken.

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