Teva Pharmaceuticals is suing the Centers for Medicare & Medicaid Services (CMS) for its implementation of the drug price negotiation program under the Inflation Reduction Act (IRA).
Teva claims the program is a “fiction” and “upsets the delicate balance between innovation and affordability,” in its lawsuit (PDF). The company argues CMS guidance contradicts key elements of the IRA, which dictate drugs are only eligible for the program if they’ve been marketed for a specified amount of time or declares they are exempt when non-branded competitors enter the market.
Another source of contention is the agency’s definition of a qualifying single source drug, or a drug eligible for negotiation.
“Under CMS’ made-up definition, the agency can decide that two or more drugs approved under distinct FDA applications held by the same entity should be treated as one Qualifying Single Source Drug because they have the same active moiety—that is, the same active molecule,” the lawsuit reads.
Austedo, a brand-name drug from Teva that treats neurological diseases, is a candidate for the next round of negotiations, researchers wrote in the Journal of Managed Care & Specialty Pharmacy in September.
The second round of drugs selected for the program is expected to be announced by Feb. 1. It’s possible the Biden administration will release the next round of drugs before he leaves office, but, if not, President-elect Donald Trump won’t have long to decide how to move forward with the program.
The CMS said in October it expects the first round of negotiations to save individuals $1.5 billion in out-of-pocket costs in 2026.
While the federal government says the program brings down drug costs, pharma manufacturers and other critics say the program disincentivizes innovation. Drug manufacturers also counter the program reflects price controls more closely than real negotiations.
As of December, at least nine active lawsuits were taking aim at the CMS and aspects of the program, reported the KFF. Most attempts to pare back or eliminate the program through the courts have proven unsuccessful so far.