Inflation Reduction Act Faces More Legal Challenges, including long-expected PhRMA lawsuit

As we and others closely following drug pricing have predicted, multiple additional lawsuits have followed in the wake of Merck’s challenge to the Inflation Reduction Act (IRA) price negotiation provisions in the D.C. federal district court on June 6 (see our post here).  Since then, complaints have been filed in federal court in Ohio by the U.S. Chamber of Commerce (complaint here), in New Jersey by Bristol Myers Squibb (complaint here), and in Texas by Pharmaceutical Research and Manufacturers of America (PhRMA) and others (complaint here).

Both Merck (maker of Januvia, Janumet, and Keytruda) and BMS (maker of Eliquis and Opdivo) argue that the IRA is unconstitutional under the First Amendment because it compels speech and under the Fifth Amendment because it represents an uncompensated taking. PhRMA’s lawsuit makes a similar Fifth Amendment argument, but adds an Eighth Amendment excessive fines argument based on the exorbitant excise tax penalty, and a “separation of powers” argument—i.e., that Congress may not delegate to an agency the authority to arbitrarily set pricing while “barring judicial review of many decisions critical to pricing determinations under the Act.” PhRMA Complaint at 54.  The U.S. Chamber of Commerce makes all the arguments that the other plaintiffs have made, and also alleges that Congress has no power to levy the excise tax because it “compels” commerce.

September 1, 2023 will be the selection date for the 10 drugs that will be subject to “maximum fair price” ceilings under Medicare Part D starting in 2026.  After that date, we may see lawsuits brought by additional manufacturers whose drugs are on the list and who will then be able to demonstrate the requisite actual or imminent injury to achieve standing.