The Inflation Reduction Act will have the U.S. Department of Health and Human Services negotiate prices with drug companies for a limited number of single-source drugs that don’t have generic competitors covered under Medicare Part D (starting in 2026) and Part B (starting in 2028).
Under this program, the federal government will negotiate the prices for 10 drugs in 2026, an additional 15 in 2027, another 15 in 2028, and another 20 in 2029 and later years, according to the Kaiser Family Foundation.
Starting this year, there will already be a monthly cap on insulin cost sharing, which took effect Jan. 1 for insulin covered under Medicare Part D and will take effect July 1 for insulin covered under Part B.
“While we would all like to see a market-based reduction in prescription drug prices, the government should not be price setting for private industry,” Kershner said. “We feel that this filing was a natural course of action to protect the rights of our business community. We were pleased that the Ohio Chamber of Commerce, the Michigan Chamber of Commerce and the U.S. Chamber of Commerce have joined together in support of this pro-business filing.”
Constitutional challenge
The lawsuit, which is filed in the U.S. District Court for the Southern District of Ohio Western Division, is a constitutional challenge, saying drug companies are being forced into paying price cuts they didn’t negotiate or face a penalty fine.
“The IRA (Inflation Reduction Act) uses the term ‘negotiation’ to mislead the public into believing that a voluntary and fair bargaining process will take place between the government and pharmaceutical companies. The reality, however, is that Congress has not set up a negotiation at all. Congress created an unprecedented, one-sided regime that forces manufacturers to sell drugs at government-set prices. The appropriate term for this is ‘mandated price control,’ not ‘negotiation,’” said the lawsuit signed by attorneys Gregory A. Ruehlmann and Tami H. Kirby, attorneys representing the Dayton, Ohio, Michigan, and U.S. Chambers of Commerce.
The drug prices are “unfairly low” and “government-mandated,” the lawsuit says, which adds that requiring drug manufacturers to stick to these prices will disrupt drug research and cost jobs.
“We are suing to block an illegal and arbitrary government price control scheme,” said Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce.
Price controls lead to shortages and rationing, he said, meaning there will be less access to new medications and treatments.
“This attempt to impose government price controls is a dangerous precedent that must be blocked,” said Bradley. “After all, if the government can impose price controls in the pharmaceutical industry, why not elsewhere?”
Drug companies that want to leave government health care programs like Medicare would also be faced with selling drugs at the established prices in the meantime, or facing penalties, as statutorily required delays mean it would take 11 to 23 months for a manufacturer to remove itself from the government program.
The drug price controls exceed Congress’ powers, as well as denies pharmaceutical manufacturers due process of law under the Fifth Amendment, imposes excessive fines, and compels speech in violation of the First Amendment, the lawsuit says. The chambers involved in the lawsuit are asking the court to declare the drug pricing controls unconstitutional and prohibit its enforcement.
Dayton chamber member
The Dayton Area Chamber of Commerce includes more than 2,200 businesses and organizations in a 14-county area surrounding Dayton. The chambers involved in the lawsuit also represent members who would be directly subject to the Inflation Reduction Act’s drug price controls, including AbbVie, which is a member of the Dayton Area Chamber and the U.S. Chamber, and markets the drug IMBRUVICA.
IMBRUVICA is a cancer drug used to treat adults with chronic lymphocytic leukemia, small lymphocytic lymphoma, or Waldenström’s macroglobulinemia, which are cancers involving white blood cells.
The drug was also one of the top 10 gross annual Part D expenditures for plan year 2021, according to the lawsuit, which cites data from the Centers for Medicare and Medicaid Services (CMS). The government spent $3.15 billion on the drug in 2021, accord to CMS data. The average retail price for IMBRUVICA is approximately $16,390, according to GoodRx.
If selected to be part of the drug price controls program, AbbVie would have to sell IMBRUVICA at “unreasonably low” prices lower than the current market prices, the lawsuit says. AbbVie would also have to disclose sensitive proprietary information during the negotiation process.
The Dayton Daily News has reached out to AbbVie for comment.
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