Enacted in August 2022, the Inflation Reduction Act (IRA) contains several reforms designed to lower the high cost of prescription drugs and make them more accessible to patients, including seniors enrolled in Medicare. One such reform is the IRA’s drug price negotiation program, which provides a pathway to lower the prices for a particular set of high-cost drugs—so-called single-source drugs, for which no generic equivalent is currently on the market. The program relies on a process in which the Department of Health and Human Services (HHS), which is responsible for implementing Medicare, and the manufacturer of selected drugs negotiate the prices at which drugs will be made available to Medicare providers and drug plans.
Filing lawsuits in courts across the country, drug companies, including Bristol Myers Squibb and Janssen Pharmaceuticals, have challenged the IRA program, seeking, among other things, a declaratory judgment that the IRA program violates the Takings Clause. Public Citizen, joined by Patients for Affordable Drugs Now, Doctors for America, Protect Our Care, and Families USA, filed an amicus brief in support of the government’s opposition. The amicus brief explains that high prescription drug prices force many Medicare enrollees, including seniors, to cut back on other necessary expenses or forgo medications that they cannot afford, risking adverse health effects and premature death. In addition, our brief explains that the plaintiff companies’ Takings Clause claims are based on the notion that the price that the company chooses to charge for a drug is necessarily the drug’s “fair market” price. Drug companies, however, set prices for brand-name prescription drugs under monopolistic conditions, and the sales prices charged are not necessarily “fair market” prices. Indeed, drug companies charge different amounts to different buyers. Because the companies’ Takings Clause argument fails to take into account the dynamics that inform pricing in the market for brand-name prescription drugs, their assertions that the price negotiated under the IRA program results in an unconstitutional taking fail.
We have also filed amicus briefs in other cases challenging the IRA program:
- AstraZeneca Pharmaceuticals LP v. Becerra
- Dayton Area Chamber of Commerce v. Becerra
- Merck & Co. v. Becerra