Legal Momentum Grows Against IRA

Image credit: AdobeStock_527614812 (Inflation Reduction Act is shown using the text and the US flag, By Andrii)

Pharmaceutical Research and Manufacturers of America (PhRMA) along with the National Infusion Center Association (NICA), and the Global Colon Cancer Association (GCCA), filed a complaint in U.S. District Court for the Western District of Texas against the Inflation Reduction Act (IRA) Thursday, June 21.¹ According to a statement from PhRMA, the statute violates the Constitution’s separation of power and due process clauses and includes an extreme excise “tax” to force manufacturer compliance with the government mandated price. The statement said, based on violations of the Fifth and Eighth Amendments to the Constitution, the whole Act should be ruled unconstitutional.

This complaint follows the June 6 complaint filed a civil action in the United States District Court for the District of Columbia.² Merck, known as MSD outside of the United States and Canada, also alleges that the price controls introduced by the IRA, which require the Centers for Medicare and Medicaid Services to begin setting prices on small molecule medicines at nine years and large molecule medicines at 13 years, are unconstitutional.³

Outside of the pure legal aspects, both Merck and the joint plaintiffs in the PhRMA complaint, assert that the IRA will stifle biopharmaceutical innovation.

For example, in a letter to the community, Merck stated: “Patients and the public need biopharmaceutical innovation to address global health challenges like cancer and Alzheimer’s disease, and the IRA is negatively affecting critical research and development. By changing the incentives and returns for some therapies and technologies over others, the IRA is changing the course of R&D, which in time will leave many patients without treatment options.”²

Contained within the PhRMA release, PhRMA President and CEO Stephen J. Ubl stated, in part: "The price setting scheme in the Inflation Reduction Act is bad policy that threatens continued research and development and patients’ access to medicines.”¹ Previously, Ubl has described the innovation conundrum in detail.⁴

Meanwhile, organizations representing patients, are against the IRA for numerous reasons.

In the PhRMA press release, NICA Chief Executive Officer Brian Nyquist noted what could be construed as a “unintended consequences: of the IRA. “NICA supports lower costs for patients, but infusion providers have no control over setting the prices of the medications they administer. NICA’s members have an interest in being adequately reimbursed for the treatments they provide, and they have an interest in continuing to operate their healthcare business. The government price setting provisions in the IRA may inadvertently set reimbursement below acquisition cost, exacerbating existing consolidation trends and reducing our nation’s community-based infusion capacity. This would leave patients with the hospital as their only option—which is by far the most expensive setting.”¹

GCCA Executive Director Andrew Spiegel cited the lack of current treatments as a reason to not stifle innovation. He stated in part, “In less than seven years, colorectal cancer is predicted to become the leading cause of cancer deaths for people under 50, and it is already the second leading cause of all cancer deaths, behind only lung cancer. We need more and better treatments, and we need them now. The price setting provisions in the IRA thwart the progress we have made and lead to less hope for patients battling this disease.”¹

References

1. NICA, GCCA, PhRMA Litigation Asserts Price Setting Provisions in the Inflation Reduction Act are Unconstitutional. WASHINGTON, D.C. June 21, 2023.
2. The Inflation Reduction Act’s Negative Impact on Patient-Focused Innovation, Value and Access. https://www.merck.com/news/the-inflation-reduction-acts-negative-impact-on-patient-focused-innovation-value-and-access. June 6, 2023.
3. Playter, G. Merck Files Lawsuit Against US Government. Pharmaceutical Technology. https://www.pharmtech.com/view/merck-files-lawsuit-against-us-government. June 8, 2023.
4. Ubl, S.; Herper, M. The Inflation Reduction Act: Unfinished Business. Presentation at PhRMA Foundation, November 15, 2022. https://phrma.org/resource-center/Topics/Economic-Impact/The-Inflation-Reduction-Act-Unfinished-Business