The Trump administration, perhaps surprisingly, chose to defend the legality of the Inflation Reduction Act’s (IRA’s) drug price negotiation program enacted under President Joe Biden.
In a filing Feb. 19, the government agreed with the legal arguments used by the prior administration and by a lower court, dealing a blow to pharmaceutical drugmakers enraged by the program.
The Trump administration claimed the “district court correctly concluded that it lacked jurisdiction to review plaintiff’s Eighth Amendment claim,” as well as “correctly rejected” takings and compelled speech claims. The defendants claim the program is consistent with the First Amendment.
The feds are urging the court to affirm the lower court’s rulings. Participating drug companies must sign agreements by Feb. 28 as part of the next step in the process.
Some conservative experts and lawmakers agree with drugmakers that the law is unconstitutional and damaging to innovation. They decry the negotiation process, arguing drugmakers don’t truly have a financial choice in determining whether to participate in the program.
“[The Centers for Medicare & Medicaid Services (CMS)] is the judge, jury, executioner and beneficiary of this, which is why I think it’s a constitutional monstrosity,” said Dan Troy, managing director of consulting firm Berkeley Research Group, during a webinar hosted by the Federalist Society, a conservative legal group, on Feb. 12. Troy spoke on behalf of himself and noted he filed an amicus brief against the government in his own capacity as well as testifies on behalf of pharma companies. He said he has no financial stake in filing an amicus brief or testifying.
Drug price negotiation critics hoped the new administration would push to slow, halt and overturn the program through federal guidance, the courts system and Congress.
But President Donald Trump and Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. are also quite willing to slam the pharmaceutical industry. In recent months, executives at the largest drug companies have met with Trump, encouraging him to legislate against pharmacy benefit managers (PBMs).
“Patients for Affordable Drugs is encouraged that the Trump administration’s Department of Justice has, for now, maintained the government’s legal defense of Medicare negotiation,” said Executive Director Merith Basey in a statement to Fierce Healthcare. “However, with President Trump meeting with PhRMA executives again this week—who have aggressively fought to dismantle Medicare negotiation—and the deadline looming for manufacturers of the next 15 drugs selected to officially agree to negotiate, we know the industry is applying enormous pressure, and this brief does not necessarily guarantee the administration’s long-term commitment to upholding the program.”
Trump could still actively change the government’s stance, diminish enforcement or heed drugmakers’ wishes, she added. Last month, the CMS wrote in a release that it intends "to provide opportunities for stakeholders to provide specific ideas to improve the Negotiation Program, consistent with the goals of achieving greater value for beneficiaries and taxpayers and continuing to foster innovation.”
“It is always possible that they change their mind,” said Zach Baron, director of the Center for Health Policy and the Law at the O’Neill Institute for Georgetown Law. “However, they would be required to inform Congress about their decision not to defend the law.”
As part of mass federal firings, employees tasked with carrying out the negotiation program were terminated inside the CMS, the Huffington Post reported. If the department is improperly staffed, it will be difficult to meet statutory milestones, said Baron.
In January, the Biden administration named Ozempic, Wegovy and Rybelsus as part of the second annual drug pricing program. The 25 drugs selected in the first two years represent 36% of Medicare Part D spending. Advocacy groups routinely point to the program’s ability to lower drug costs for everyday Americans.
Still, many would love to see the program disappear.
“I don’t want anyone misinterpreting that we are recommending that the Trump administration ignore the law that Congress passed and President Biden signed," said Jeff Stier, senior fellow of the Consumer Choice Center and Taxpayers Protection Alliance, during the webinar.
But he laid out options on how Mehmet Oz, M.D., otherwise known as Dr. Oz, could slow-walk the legislation if confirmed as CMS administrator by the Senate. Instead, he said the program should be paused until the courts continue to rule on the many cases in federal courts.
“I do not believe there is a requirement that the administration advance a law that itself might recognize is unconstitutional,” he said. “I don’t think some anti-pharmaceutical consumer group will be able to challenge the administration’s lack of implementation, and then for that litigation to leapfrog ahead of the ongoing litigation.”
“I would hope that the folks at CMS will at least take a look at the last list of drugs that came out three days before the election,” added Troy. “It’s well within the time the Trump administration can pull back on what was done. All of this was done by guidance. And what was done by guidance can be undone by guidance.”
The Trump administration shares the belief that the program cannot be paused because there are statutory guidelines and deadlines the government must meet as required under the IRA. Any attempt to do so would likely result in new lawsuits.
“But, it is hard to predict what the administration may decide to do,” said Baron.