Traders work on the floor of the New York Stock Exchange during morning trading on April 10, 2023 in New York City.
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The largest lobby group of the pharmaceutical industry and two other organizations announced this on Wednesday sued the Biden administration on Medicare’s new powers to lower drug prices for seniors under the Inflation Reduction Act.
Pharmaceutical Research and Manufacturers of Americaalong with the National Infusion Center Association and the Global Colon Cancer Association, allege that Medicare negotiations with drugmakers violate the U.S. Constitution, in a complaint filed in federal court in Texas.
PhRMA represents many of the world’s largest drug manufacturers, including Eli Lilly, Pfizer And Johnson & Johnson.
The groups asked the court to declare the program unconstitutional and prevent the Department of Health and Human Services from conducting Medicare negotiations without “adequate procedural protections” for drugmakers.
HHS did not immediately respond to CNBC’s request for comment.
It is the fourth lawsuit against the controversial provision of the Inflation Reduction Act, which became law last summer in a major victory for President Joe Biden and Democratic lawmakers.
The policy aims to make drugs more affordable for older Americans, but is likely to reduce pharmaceutical industry profits. Merck And Bristol Myers Squibb — which are also represented by PhRMA — and the U.S. Chamber of Commerce filed separate lawsuits against the provision earlier this month.
The latest lawsuit argues that the plan delegates too many powers to the Department of Health and Human Services.
PhRMA and the two organizations also argue that the provision includes a “crippling” excise tax aimed at forcing drugmakers to accept the government-mandated price of drugs, making it an outrageous fine prohibited by the Eighth Amendment.
The lawsuit also argues that the policy violates due process by denying drug companies and public input on how Medicare negotiations will be conducted.
“The pricing regime in the Inflation Reduction Act is a bad policy that threatens further research and development and patient access to medicines,” PhRMA CEO Stephen Ubl said in a statement.
“It also violates the U.S. Constitution because it contains barriers to transparency and accountability, gives the executive branch unlimited discretion to set the price of drugs in Medicare, and relies on an absurd enforcement mechanism to enforce compliance,” Ubl said.
The first 10 medicines to which the provision applies will be chosen in September, with the agreed prices taking effect in 2026.