The pharmaceutical industry’s resistance to the Biden administration’s program for lowering what Medicare pays for costly drugs is expected to broaden this year, though resolution is unlikely as different lawsuits wind their way through several courts.
In addition to the drug price program, scrutiny of other administration actions indicate 2024 is likely to play host to significant shakeups on the drug pricing front.
Among them are “important rulings at the district court level” addressing “the wide range of constitutional and statutory claims being pursued by the pharmaceutical industry,” said Zachary Baron, director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute.
Negotiation Program
Drugmakers and industry groups have filed 10 lawsuits thus far against the HHS over the drug pricing program. The litigation mostly hinges on whether the drug pricing program is constitutional under the First and Fifth Amendments.
The US District Court for the Southern District of Ohio is currently the only one of the six courts playing host to the drug pricing litigation to rule on the merits of the legal claims against the Medicare program.
That court, in litigation brought by the US Chamber of Commerce that is still ongoing, declined to issue a preliminary injunction to block implementation of the program, ruling that drugmakers participate in Medicare voluntarily and thus the plaintiff will be hard pressed in proving a due process violation.
Whether other courts follow the Ohio court’s lead or “accept industry’s argument that the negotiation program, and constraints on how much Medicare will pay for certain prescription drugs, truly is ‘unprecedented’” will be “the biggest issue to watch” in 2024, Baron said.
“I take seriously the hints from the pharmaceutical industry that they will bring additional lawsuits in connection with the negotiation program, but the path forward in 2024 is not clear,” Baron said.
In October, Steve Ubl, CEO of the drug industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) told Bloomberg Law that more drug pricing lawsuits against the HHS were likely. PhRMA is among the plaintiffs that have already sued the HHS.
And should companies and trade groups behind the current lawsuits move for injunctions or emergency relief to slow the negotiation program in the year ahead, “courts tend to look skeptically on such gamesmanship,” Baron said.
When it comes to Medicare drug price negotiations, legal experts say it could be years before there’s resolution.
That said, 2024 is likely to see “unprecedented judicial and executive action—each proceeding full steam ahead on parallel tracks” said Margaux Hall, partner in Ropes & Gray’s health care practice. While litigation over the program plays out in different courts, the HHS will be moving to conduct “so-called negotiations for the first year of the program,” Hall said.
And how the HHS’ Centers for Medicare & Medicaid Services implements the program could affect legal strategies against the agency.
“As CMS implements the negotiation program, we will learn more about the agency’s interpretation of the statute,” Hall said. That agency action could provide the basis for additional legal challenges, if it is viewed as exceeding the bounds of what Congress authorized.”
Additionally, “other stakeholders—whether patients, health professionals, or others—may contemplate legal action as they better understand the nature of the negotiation program and how it may adversely impact them,” Hall said.
Drug Disputes
The federal government has taken an aggressive stance on drug pricing in recent years, pulling previously unused levers and utilizing newly gained powers in the effort of lowering prescription costs.
In March 2023, the HHS released a list of 27 prescription drugs for which prices rose faster than inflation. Drugmakers behind those products, a roster that includes
Also under the IRA—the law that likewise established Medicare drug price negotiations—out-of-pocket costs for insulin were capped at $35 per monthly prescription for Medicare enrollees.
Similarly, in December, the Biden administration floated a long-awaited framework on how it could seize patents on costly drugs to license them out to produce cheaper versions. Though the framework has yet to be finalized, it signals the administration believes it can use the so-called march-in rights to lower the cost of drugs, a hot-button issue in the intellectual property space.
“Given its recent statements, the Administration will likely initiate march-in efforts under the Bayh-Dole Act,” said Yaniv Heled, a Georgia State law professor, referring to the law that established march-in rights.
The drug industry is already preparing to fend-off march-ins on its products. In December, PhRMA’s Ubl wouldn’t rule out the possibility of lawsuits against the Biden administration should the march-in framework be enacted.
The US Supreme Court’s decision to hear arguments over Food and Drug Administration safety determinations on the abortion drug mifepristone is another legal development that “might have big implications for drug pricing,” Heled said.
Taken alongside another dispute before the justices this term touching on the power of administrative agencies’ decision making, the mifepristone litigation “could significantly affect private parties’ ability to similarly challenge FDA decisions that have traditionally benefited from deference by the courts,” Heled said.
“The ability of pharmaceutical companies, insurance companies, NGOs, physicians, and patients to challenge FDA decisions that affect the availability and pricing of certain drugs could have far-reaching implications,” Heled said.