Drugs Up for Medicare Price Cuts Fuel Drugmakers’ Legal Strategy

Drugmakers are poised to change their lawsuits and bring new ones against the Biden administration now that the list of the first 10 drugs subject to Medicare price negotiations is out.

Bristol-Myers Squibb Co., Johnson & Johnson, and other companies with drugs up for negotiation are likely to amend their lawsuits against the price talks under the Inflation Reduction Act to better their chances at taking down the program, legal analysts say.

Amending complaints could bolster the plaintiffs’ chances at overcoming government arguments that they lack standing to sue and allow them to later move for summary judgment or request a preliminary injunction.

Companies like Amgen Inc. and Novo Nordisk that have drugs on the list but haven’t sued yet may do so, or join suits already filed, attorneys say, contributing to a pharmaceutical industry legal strategy geared toward getting the US Supreme Court to intervene.

“Now that the list is announced, we’ll definitely see movement in the lawsuits, because beforehand it was a little more of a theoretical harm,” said Carmel Shachar, a professor at Harvard Law School. “I think we’ll see a big flurry of action when the prices are announced as well, with attempts to hold it up with injunctions and summary judgment.”

Drugmakers and industry groups that sued before the release of Medicare’s list issued statements afterward that they remain steadfast in their position that the price negotiation program is unconstitutional. Eight lawsuits were filed before the list announcement. Another company with a drug on the list, Novartis AG, sued after.

“The IRA’s price control provisions will constrain medical innovation, limit patient access and choice, and negatively impact overall quality of care,” J&J said. “The IRA’s policies put an artificial deadline on innovation, threatening intellectual property protections and shortening the timeframe to deepen our understanding of patients’ unmet medical needs. At the same time, seniors could face bureaucratic barriers to access and potentially higher out of pocket costs even with the IRA’s out-of-pocket cost limits for Part D drugs.”

Attorneys note that some of the lawsuits may be scaled back with the list out, while others are expanded to encompass new claims. Some judges may try and consolidate the litigation, the attorneys say.

They also note that more drugmakers may push courts for a preliminary injunction against the program to buy time while the litigation inches its way to the highest court.

“They’re not going to give this up quietly,” said Yaniv Heled, a professor at Georgia State University College of Law. “You can expect to see lawsuits, and then appeals, and then more lawsuits and then more appeals.”

‘Fight to the Bitter End’

The 10 drugs selected for pricing negotiations are Bristol-Myers and Pfizer Inc.‘s Eliquis, J&J’s Xarelto, Boehringer Ingelheim and Eli Lilly & Co.‘s Jardiance, Merck & Co. Inc.‘s Januvia, AstraZeneca PLC’s Farxiga, Novartis’ Entresto, Amgen’s Enbrel, AbbVie Inc. and J&J’s Imbruvica, J&J’s Stelara, and Novo Nordisk’s Fiasp and NovoLog insulin products.

Pfizer said it wouldn’t be leading negotiations over Eliquis’ list price and that the task would fall to Bristol-Myers. Eli Lilly similarly said the company “will not have any role in whatever price is set” by Medicare for Jardiance.

Novo Nordisk said it “will explore all options that allow us to drive change for people that need it and strive to continue to bring innovative medicines to the market while helping increase access for those that need them,” though it took issue with the government’s approach. Likewise, AstraZeneca said it would “evaluate our next steps over the coming weeks.”

Merck filed the first lawsuit to block the negotiations in June, followed by suits by other drugmakers and their allies, arguing the program was unconstitutional or violated procedural requirements for implementation.

They’re awaiting a decision from Judge Michael J. Newman of the US District Court for the Southern District of Ohio on the U.S. Chamber of Commerce’s request for a preliminary injunction—an ask that could halt the program before negotiations even begin.

The Chamber asked the court to rule before the Oct. 1 deadline when drugmakers must decide if they will enter negotiations. The group said the Biden administration didn’t do its “homework” to understand price control schemes and is rushing for implementation.

“They had a year to research these basic questions,” Neil Bradley, the Chamber’s executive vice president and chief policy officer, said in a press call.

Drugmakers who’ve already filed lawsuits will “fight to the bitter end,” Heled said.

“I can’t imagine that the litigations are going to end before these prices are supposed to take hold or go into force,” Heled said.

Drug manufacturers on the list will also “definitely” want to amend their complaints, said Laura Dolbow, a fellow at the University of Pennsylvania Law School who specializes in administrative law.

Companies may also amend their complaints to include additional causes of actions, said Andrew Twinamatsiko, associate director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute. For example, plaintiffs arguing the program violates the First, Fifth, and Eighth Amendments of the Constitution may consider raising Administrative Procedure Act claims like those in recent lawsuits from AstraZeneca and Boehringer Ingelheim.

Drugmakers “could find a creative way of going around” the drug pricing law’s preclusion of judicial review of prices, he said.

More constitutional claims could emerge, and the courts could have a “remarkably large number of potential avenues to consider,” said Robin Feldman, a law professor at the University of California, San Francisco.

“What are they not claiming?” Feldman said. And “lawsuits already filed have named more constitutional provisions than most people knew existed.”

‘No Standing’

Astellas Pharma Inc., which filed a suit July 14, ended up with none of its products on the list. Legal experts expect Astellas’s case to be dismissed.

The drugmaker said in a statement that no decisions have been made regarding its lawsuit, but it remains confident in its stance that the program “would result in lower costs for the government, but not necessarily reduce out-of-pocket costs for patients.”

The case brought by trade group Pharmaceutical Research and Manufacturers of America also faces possible dismissal.

The Biden administration filed a motion to dismiss the PhRMA suit in the US District Court for the Western District of Texas a day before the list came out, specifically asking that the National Infusion Center Association be dismissed because it lacks standing and failed to allege that the federal program will cause any of its members an injury.

The actions drugmakers with products on the list take now could affect what other manufacturers will do in the future, said Nicholas Bagley, a law professor at the University of Michigan. The experiences of the drugmakers in the first round of negotiations could set the precedent for price talks in later rounds.

“If you’re a manufacturer who doesn’t have a drug listed, you’re likely to sit back and watch these other litigants,” Bagley said.