Traders work on the floor of the New York Stock Exchange during morning trading on April 10, 2023.
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The pharmaceutical industry’s largest lobby group and two other groups Wednesday prosecute The Biden administration has questioned Medicare’s new powers under the Reduce Inflation Act to lower drug prices for seniors.
Association for Pharmaceutical Research and Manufacturers of Americaalong with the National Association of Infusion Centers and the Global Colon Cancer Society, argued in a complaint filed in federal district court for Texas that Medicare negotiations with drugmakers violate the U.S. Constitution.
PhRMA represents many of the world’s largest pharmaceutical manufacturers, including Eli Lilly, Pfizer and Johnson & Johnson.
The groups are asking the court to declare the program unconstitutional and block HHS from enforcing Medicare negotiations without providing “adequate procedural protections” for drugmakers.
HHS did not immediately respond to CNBC’s request for comment.
It marks the fourth lawsuit challenging a controversial provision of the Lower Inflation Act, which became law last summer, a major victory for President Joe Biden and Democratic lawmakers.
The policy aims to make medicines more affordable for older Americans, but could reduce profits for the pharmaceutical industry. Merck and Bristol-Myers Squibb – who are also represented by PhRMA – and the U.S. Chamber of Commerce filed separate lawsuits over the provision earlier this month.
The latest lawsuit argues that the plan delegates too much authority to HHS.
PhRMA and the two groups also argued that the provision included a “severe” excise tax designed to force drugmakers to accept government-mandated drug prices, making it an exorbitant fine prohibited by the Eighth Amendment.
The suit also argues that the policy violates due process by denying drug companies and the public a say in how Medicare negotiations will be implemented.
“The price-setting program in the Lower Inflation Act is poor policy that threatens continued research and development and patient access to medicines,” PhRMA chief executive Stephen Ubl said in a statement.
“It also violates the U.S. Constitution because it includes barriers to transparency and accountability, gives the executive branch unfettered discretion to set Medicare drug prices, and relies on absurd enforcement mechanisms to enforce compliance,” Ubl said .
The first 10 drugs to which the rule applies will be selected in September and the agreed prices will come into effect in 2026.