What to Know About the Legal Battle Against Medicare Drug Price Negotiations

BY JOSEPH CHOI - 07/26/23 6:01 AM ET

In this photo made Friday, May 11, 2012, Jean Greenleaf returns her medication to a cabinet at her home in Winthrop, Maine. Greenleaf, 73, originally stood to lose funding for the drugs she takes for diabetes, cholesterol, a stomach disorder and depression under Gov. LePage’s original budget proposal, but a compromise was reached by the Appropriations Committee. (AP Photo/Robert F. Bukaty)

The court battle over Medicare’s drug price negotiation program continues to heat up ahead of a key date for deciding which drugs will be included.

As of last week, there are now five organizations — three pharmaceutical companies and two trade groups — suing the federal government over the Medicare Drug Price Negotiation Program established through the Inflation Reduction Act (IRA).

The program is a key pillar of the Biden administration’s health care agenda, and the White House has maintained the law is on its side when it comes to its authority to implement negotiations.

Here’s what to know about the Medicare drug price negotiation legal battle:

The program was enacted by President Biden nearly one year ago, when he signed the IRA into law in August.
Since then, the Centers for Medicare & Medicaid Services (CMS) has been laying the groundwork for negotiations. Initial guidance was released in March, with a revised version including responses to the industry pushback released last month.
Negotiations are expected to take place over 2023 and 2024.

In early June, pharmaceutical giant Merck became the first entity to file a lawsuit challenging the federal government’s negotiation plan, blasting it as a “sham.” The company took issue with what it characterized as coercive tactics that left it little choice but to agree to the government’s proposed prices.

Representatives from the company have said Merck is not opposed to negotiations, but argued that the process set before them is unconstitutional. 
The first 10 drugs that will be subject to Medicare price negotiation are set to be announced at the start of September.
Under the current schedule, the negotiated prices will go into effect at the start of 2026.

Legal arguments
Shortly after Merck filed its challenge, the Chamber of Commerce, Bristol Myers Squibb and the Pharmaceutical Research and Manufacturers of America (PhRMA) filed their own lawsuits against the federal government.
Johnson & Johnson became the most recent plaintiff to challenge the negotiation program when it filed its own lawsuit last week.
These organizations have pointed to a handful of constitutional amendments that they claim the CMS is in violation of — in what legal experts told The New York Times is a strategy “directly targeted at the Supreme Court.” 

The two most commonly cited amendments are the First and Fifth Amendments.
The First Amendment claim comes from the plaintiffs’ argument that engaging in negotiations is compelled speech — essentially forcing companies to agree with the process when they do not. 

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