Austin, Texas – A federal judge in Austin has dismissed a lawsuit brought by pharmaceutical industry bodies challenging a new Medicare program that allows the government to negotiate prices for expensive drugs. U.S. District Judge David Ezra, appointed by Ronald Reagan, sided with the Biden administration in throwing out the lawsuit. The Pharmaceutical Research and Manufacturers of America (PhRMA) group and two others had claimed the program was unconstitutional.
Under the program, known as the Inflation Reduction Act, the Department of Health and Human Services is authorized to seek lower prices for certain drugs, ultimately saving government funds for Medicare patients. However, pharmaceutical companies that refuse to participate in the program would then face significant fines or withdraw from Medicare. This poses a dilemma for these companies as Medicare covers a large number of older Americans, who make up a substantial portion of prescription spending.
The lawsuit, brought by PhRMA, the Global Colon Cancer Association, and the National Infusion Center Association, argued that the fines imposed by the program were excessive and could range from 185 percent to 1,900 percent of a drug’s price, depending on the duration of noncompliance. These fines would be calculated based on a drug’s total sales, including those made beyond Medicare.
While Judge Ezra had previously acknowledged that the program could potentially harm pharmaceutical companies, he ultimately dismissed the case because the claims fell under the jurisdiction of the Medicare Act. According to the act, these claims can only be heard by a court after an administrative review.
PhRMA spokesperson Nicole Longo expressed disappointment with the court’s decision and stated that they are considering their next legal steps following the ruling. This is an ongoing story and will be updated with further details.
In summary, a federal judge in Austin, Texas, has rejected a lawsuit challenging a new Medicare program that allows the government to negotiate drug prices. The program, aimed at lowering costs for certain drugs, has faced opposition from pharmaceutical companies. However, the judge’s dismissal of the lawsuit suggests that the claims against the program must go through an administrative review process. This decision marks a legal victory for the Biden administration and highlights the ongoing tension between the pharmaceutical industry and efforts to control healthcare costs.