U.S. Chamber Files Lawsuit Challenging HHS Drug Price Control Program
Officials from the U.S. Chamber of Commerce have taken legal action against the U.S. Department of Health & Human Services (HHS) by filing a motion for preliminary injunction in U.S. district court. The chamber claims that the implementation of drug price control mechanisms under the Inflation Reduction Act (IRA) by the HHS is plagued with legal uncertainties. The chamber believes that these uncertainties will overshadow the Biden Administration’s celebration of the program’s one-year anniversary.
The lawsuit, filed in early June in the Southern District of Ohio, raises constitutional and administrative law challenges against the HHS and the Centers for Medicare & Medicaid Services’ (CMS) implementation of the IRA’s drug pricing controls. The chamber argues that the IRA disguises a mandatory pricing control regime as a negotiation process, which lacks voluntary nature due to statutory difficulties for drug manufacturers attempting to leave the Medicare program. Additionally, the chamber highlights an onerous excise tax that penalizes non-cooperating drug companies up to 1900% of daily drug sales.
However, the U.S. federal government filed a motion to dismiss the chamber’s lawsuit on August 11, citing jurisdictional issues such as lack of Article III standing and lack of ripeness. The government argues that the alleged harms mentioned in the chamber’s lawsuit are too speculative until drugs are actually selected for the negotiation process, which is scheduled to take effect in 2026.
Neil Bradley, the U.S. Chamber’s Executive VP and Chief Policy Officer, criticizes the Biden Administration for implementing drug pricing controls without thoroughly understanding the potential side effects of the scheme. The U.S. Chamber, along with its affiliates, currently has eight pending lawsuits in seven different U.S. federal district courts across six geographic circuits.
According to Andrew Varcoe, Deputy Chief Counsel of the U.S. Chamber’s Litigation Center, the real-world impacts of the IRA on drug innovation will begin on October 2. On this date, drugmakers whose treatments are selected for negotiations will be required to sign agreements and share extensive data with the HHS. The chamber argues that the U.S. government incorrectly rebranded the chamber’s due process arguments as an issue under the Takings Clause, emphasizing that constitutional due process principles play a crucial role in overturning rate-setting regimes.
The chamber also questions the voluntary nature of the IRA’s drug pricing regime, highlighting that withdrawing all products from federal healthcare programs would be detrimental for drug manufacturers. Even if participation in Medicare were truly voluntary, the chamber argues that voluntary participation does not dismiss due process concerns.
The chamber claims that irreparable harm is already being suffered by drug manufacturers, who will soon find out if their medical treatments will fall under the grip of pricing controls. Compliance costs are already substantial, and the U.S. Chamber cites studies indicating declines in new drug development and life expectancy as important factors supporting equitable relief to prevent the implementation of the drug pricing control program.
The chamber expects the Southern Ohio court to rule on the motion for preliminary injunction by September 29, with the possibility of appealing to the Sixth Circuit. Meanwhile, the chamber has sent a letter to HHS Secretary Xavier Becerra addressing their concerns. This legal battle highlights the ongoing debate regarding drug pricing controls and their potential impact on innovation and access to medication in the United States.
