A New Orleans federal appeals court has reinvigorated a legal challenge to a key Biden administration health care initiative that seeks to lower prescription drug prices for Medicare beneficiaries.
AP News reported that a recent court decision has thrown a Biden administration plan to reduce Medicare drug prices back into the legal spotlight.
The case stems from a dispute over the Inflation Reduction Act passed in 2022, which includes provisions for Medicare to negotiate drug prices directly with pharmaceutical companies. The goal is to reduce costs for millions of Americans who rely on Medicare for their healthcare needs.
The 5th U.S. Circuit Court of Appeals, based in New Orleans, issued a 2-1 ruling to revisit a constitutional challenge previously dismissed by a lower court. The contentious program allows Medicare to begin negotiating prices for selected pharmaceuticals, with the first set of reduced prices expected to be implemented in 2026.
The revived challenge was spearheaded by several organizations, including the National Infusion Center Association and PhRMA.
These plaintiffs argue that Congress overstepped its bounds by delegating significant pricing authority to an executive department within the administration.
Originally, the lawsuit was dismissed by a Texas-based federal district court in February, which stated that such disputes should be handled internally by the Department of Health and Human Services, as laid out in the federal Medicare Act. However, this decision was overturned by Judges Jennifer Walker Elrod and Kyle Duncan of the 5th Circuit, who pointed out that the claim pertains directly to provisions of the Inflation Reduction Act.
Judge Irma Ramirez was the lone dissenter in the appeals court decision, siding with the original dismissal based because the Medicare Act already provides a sufficient basis for addressing such legal challenges.
This judicial back-and-forth sends the case back to the lower court for a more thorough review, which could potentially delay or impact how the Medicare drug pricing provisions of the Inflation Reduction Act are implemented.
Despite the uncertainty introduced by the appeals court ruling, it does not currently halt the ongoing preparations by Medicare to implement the negotiated drug prices in 2026.
This ongoing process began last year with the announcement of the first 10 drugs to undergo price negotiations.
The Department of Health and Human Services, which is a major player in the implementation of the Act’s provisions, declined to comment on the judicial developments surrounding the program.
PhRMA, a leading pharmaceutical trade group and key plaintiff in the case, expressed satisfaction with the appeals court’s decision to reevaluate the merits of their lawsuit. "We are pleased the Fifth Circuit agreed that the merits of our lawsuit challenging the IRA’s drug pricing provisions should be heard," a representative stated.
On the flip side, AARP has shown concern over attempts to derail the drug negotiation initiative, emphasizing the negative impact such actions could have on the nation’s elderly.
“Any efforts to stop the drug negotiation program in its tracks risk the wellbeing of millions of older adults in the country who have waited far too long to afford medicine," a spokesperson for AARP mentioned.
As this legal challenge continues to unfold, the potential impacts on Medicare's drug pricing negotiations remain uncertain. Stakeholders from across the healthcare and pharmaceutical industries are closely monitoring the situation, recognizing that the outcome could significantly affect drug pricing structures and healthcare costs in the United States.
The revived lawsuit underscores the contentious nature of changing how drug prices are negotiated in the U.S., reflecting broader debates about the role of government in regulating healthcare costs. Both supporters and critics of the Inflation Reduction Act are keenly awaiting further developments as the case returns to the district court for additional consideration.
With the 5th Circuit’s decision to revive the challenge, the debate over drug pricing reform takes on renewed urgency, setting the stage for more intense legal and public policy battles in the coming years.