The Pharmaceutical Research and Manufacturers of America (PhRMA) represents some of the largest drug companies in the world, two of which have already filed their own lawsuits against the provision.
PhRMA’s complaint on Wednesday was preceded by lawsuits from Merck, Bristol-Myers Squibb and the U.S. Chamber of Commerce.
The lawsuit argues the law’s signature provision about Medicare negotiation is unconstitutional, though the Biden administration and legal experts have said they think those claims don’t hold up.
Legal experts said companies aren’t technically being forced to do anything, because they don’t have to participate in Medicare and they do have the freedom to walk away.
PhRMA CEO Steve Ubl told reporters the provisions amount to “a government mandate disguised as negotiation.”
“We remain very concerned about the impact this law will have on patients and future innovation,” Ubl said.
The organization asked the court to declare the drug pricing program unconstitutional and prevent the Department of Health and Human Services from implementing Medicare negotiations without “adequate procedural protections” for drug manufacturers.
The first 10 drugs the provision applies to will be chosen in September, and manufacturers will have a month to decide whether to sign agreements to participate. The agreed prices will take effect in 2026.
The lawsuit claims the law violates the Eighth Amendment’s ban on “excessive” fines, because of the excise tax penalty if companies refuse to negotiate.
If drugmakers don’t comply with the process, they will have to pay an excise tax of up to 95 percent of the medications’ U.S. sales or pull all their medications from the Medicare and Medicaid markets, a process that could be delayed for many months.
The true penalty can be as high as 1,900 percent of sales, PhRMA argued.
Unlike preceding lawsuits against the program, PhRMA did not make the claim the program violated the First Amendment. Constitutional law experts have been puzzled by the First Amendment claims made so far, with some noting there isn’t a true precedent for such a claim.
