The leading pharmaceutical industry group has received a setback with the dismissal of its lawsuit challenging a government price-setting program. However, the decision focused on jurisdictional issues rather than the merits of the arguments, downplaying the federal government’s victory.
The Pharmaceutical Research and Manufacturers of America, along with the National Infusion Center Association and the Global Colon Cancer Association, faced rejection Monday from the US District Court for the Western District of Texas when Judge David Alan Ezra ruled that the court lacks jurisdiction to handle the case.
The challenge is the first to be thrown out among the cluster of lawsuits fighting the Medicare drug price negotiation program. This program was created under President Joe Biden’s 2022 Inflation Reduction Act to allow the government to set prices on some of the costliest drugs Medicare covers. The Biden administration Tuesday called the ruling a “win for the American people against big pharma.”
“When President Biden came into office, he vowed to lower health-care costs for American families,” said Karine Jean-Pierre, White House press secretary, in a press briefing. “By passing the Inflation Reduction Act, the president and congressional Democrats finally allowed Medicare to negotiate lower prescription drug prices for seniors while every single Republican in Congress voted against it.”
While the administration views the ruling as a victory, there’s yet to be a decision on the merits of the case. The court’s dismissal is expected to drag out the lawsuit’s timeline until a decision is issued on the constitutional challenges brought on by PhRMA and its allies.
“This is a positive development for the government, but their victory is tempered by the fact that the dismissal was based on a lack of subject matter jurisdiction and lack of venue versus the true merits of the arguments we expect manufacturers to make,” said Melissa Wong, a health-care attorney and partner for Holland & Knight LLP based in Boston.
“The government still faces a string of lawsuits challenging the negotiation of drug prices under the IRA and it remains to be seen how much this particular dismissal drives any momentum,” Wong said.
March to the Fifth Circuit
Ezra’s order said the plaintiffs’ claims fell under the Medicare Act, which didn’t satisfy the jurisdictional prerequisites.
Despite the dismissal, questions remain about the constitutional challenges PhRMA brought to court. Those challenges allege the drug price negotiation program violates the separation of powers doctrine, the Fifth Amendment’s due process clause, and the Eighth Amendment’s prohibition on excessive fines.
PhRMA’s next steps could be filing an appeal that would land in the US Court of Appeals for the Fifth Circuit. If it and the other plaintiffs prevail, it’s likely they would have to litigate arguments at the district court level.
“They’ve got to deal with the ground floor and deal with the jurisdiction,” said Zachary Baron, director of the Health Policy and the Law Initiative at Georgetown Law’s O’Neill Institute.
“It’s just going to extend the time by which either the district court judge in Texas or Fifth Circuit panel will have to get to the merits of these legal claims,” Baron said in an interview.
Because the case was dismissed without prejudice, the plaintiffs are not barred from re-filing their lawsuit, according to Erica White, a research scholar at the Sandra Day O’Connor College of Law at Arizona State University.
But there’s still no “benchmark on whether federal courts will be sympathetic to any of the plaintiffs’ arguments” in other cases, she said.
“The other cases are unaffected. But, the courts and judges currently considering those other cases may take note of this court’s jurisdictional decisions and may agree with him and make similar decisions when considering whether the plaintiffs have jurisdiction under the Medicare Act,” White said.
Nicole Longo, a spokesperson for PhRMA, said in a statement to Bloomberg Law that the group is weighing its next legal steps and was “disappointed with the court’s decision” since it didn’t address the merits of their lawsuit.
Eight Lawsuits Remain
The industry already faced partial a setback in September 2023 when a federal judge in Ohio denied a preliminary injunction brought on by the US Chamber of Commerce and its affiliates.
The judge in Dayton Area Chamber of Commerce v. Becerra said the plaintiffs hadn’t demonstrated a “strong likelihood” of succeeding on its claim that the negotiation provisions violate the due process clause of the Fifth Amendment.
The judge also said the Chamber failed to show it would suffer “irreparable harm” without a court-ordered halt to the negotiation timeline.
Other drugmakers like
Other companies have also brought forth Administrative Procedure Act claims, challenging how the Centers for Medicare & Medicaid Services implemented the program.
The next ruling among the ongoing lawsuits could come from Chief Judge Colm F. Connolly in the US District Court for the District of Delaware on AstraZeneca’s challenge to the program.
That target date is currently set for on or before March 1, according to a stipulation he signed.