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Litigation opposing drug price controls in the Inflation Reduction Act (IRA) has yet to have a major impact, but the cases are still ongoing and IRA’s continuing rollout may create new constitutional challenges, said legal experts at the 2025 Biotechnology Innovation Organization (BIO) International Convention in Boston.
“We’re in the third inning of a nine-inning game on this,” Jeffrey L. Handwerker, J.D., Partner Arnold and Porter, said during a June 17 discussion, “Inflation Reduction Act (IRA) Litigation: Past and Future Impact on the Price Negotiation Framework.”
“We see this large number of lawsuits challenging various aspects of the process,” including the selection of drugs for negotiation, the negotiation procedure itself, and various other steps along the way, said panel moderator John Delacourt, J.D., BIO’s Deputy General Counsel and VP – Health, Regulatory & Commercial Operations.
A decision against any single part of the process could impact the whole price-setting program, he said.
The final stage in the process will be the actual setting of prices, which will take place in 2026 for the first round of drugs. There is a sense of urgency to obtain rulings before 2026, because if price controls are completely overturned after that, it would necessitate the difficult process of remunerating drug makers for funds lost to price controls, said Julia Kiechel, J.D., VP, Commercial Litigation, Johnson & Johnson
“Because there are new drugs selected every year, there is a backward-looking component but also a forward-looking component, and I would imagine the easier part is to stop the next round and then the harder part is to figure out what to do about what’s already happened,” Kiechel said.
Even if no ruling completely overturns the process, the impact of the drug price “negotiation” process could possibly be softened by rulings that partially favor the industry.
The major IRA cases
Zachary L. Baron, J.D., Director, Center for Health Policy and the Law, O’Neill Institute, Georgetown Law, presented the current status of a list of active cases:
- Merck et al, v, Becerra et al in the D.C. District Court – waiting on a decision.
- Janssen Pharmaceuticals Inc. v. Becerra et al. in the Third Circuit – waiting on a decision.
- Bristol Myers Squibb Co. v. Becerra et al. in the Third Circuit – waiting on a decision.
- PhRma’s case: National Infusion Center Association et al. v. Kennedy et al. in Western District of Texas – briefing is ongoing.
- U.S. Chamber of Commerce’s case: Dayton Area Chamber of Commerce et al. v. Kennedy et al. in the Sixth Circuit – waiting on a decision.
- Novartis Pharmaceuticals Corporation v. U.S. Department of Health & Human Services et al. in the Third Circuit – waiting on a decision.
- Boehringer Ingelheim Pharmaceuticals, Inc. v. U.S. Department of Health and Human Services et al. in the Second Circuit – waiting on a decision.
- AstraZeneca Pharmaceuticals LP et al. v. Becerra et al. in the Third Circuit –decision issued.
- Novo Nordisk Inc, et al. v. U.S. Department of Health and Human Services et al. in the Third Circuit – waiting on a decision.
- Teva Pharmaceuticals USA, Inc. et al. v. Kennedy et al. in the DC District Court – briefing is ongoing.
All of these cases bring up Fifth Amendment questions—either regarding the Takings Clause due process, or both—as well as other issues, including the First Amendment issues in some cases and the Administrative Procedure Act.
The progress on the IRA cases
The cases are moving slowly, according to Baron, who explained the state of play in a number of them.
The Novo Nordisk and Novartis cases in the Third Circuit, where there were oral arguments in April, “touched on some of the thornier issues,” including how certain products are selected and whether participation in the negotiation process could be called voluntary, Baron said. The complexity of those cases might mean the decision will take some time to compose.
Regarding the Chamber of Commerce case, Baron said there has been extended argument over the proper setting for that case, perhaps due to “forum shopping” by the plaintiffs, who are seeking a more sympathetic judge. That case could therefore take some time before it gets to substantial decisions.
The Chamber of Commerce case includes claims that the price negotiation program exceeds Congress’s constitutional authority. “We haven’t really gotten to the merits of those claims yet,” Baron said.
The PhRMA case, currently in Texas, is sure to be appealed. “Even if industry loses there, they’ll go back up to the Fifth Circuit,” said Baron, adding that the biopharma plaintiffs might do better in that court. Earlier discussion before the Fifth Circuit “seemed to suggest that maybe the due process challenge there had a little bit of legs.”
“The Fifth Circuit certainly tends to be more skeptical of aggressive federal regulatory programs, and so it may well be that the Fifth Circuit is ultimately more receptive to some of these challenges,” Baron said. “I would say there was a little bit of hostility towards the negotiation program itself.”
How the Trump Administration is different
All of these cases began before the elections in the U.S., but the change in administration and Department of Justice (DOJ) staff has not yet caused much change in the way the government is handling the cases, said Handwerker.
“Three of the lawyers for the Justice Department have left, leaving just two who have been on the case from the beginning. There’s a difference in tone in the writing, though the arguments are generally the same. The one point that is slightly different is the Trump administration lawyers have really focused on the breadth of executive power.”
An important issue coming up in these cases is the non-delegation doctrine, which says that “Congress enacts the laws, the President implements the laws, and Congress cannot pass a law without telling the President or the Executive Branch how to implement the law in a sufficient way,” according to Handwerker.
President Trump’s clear reliance on Executive powers is indicated by his heavy use of Executive Orders and reflected in the DOJ’s approach to arguing the ongoing cases on drug price negotiation. The Trump Administration Justice Department “has a more narrow view of what Congress is required to do than the prior administration,” so they would argue that Congress’s delegation has been sufficient, Handwerker said.
Looking ahead, Delacourt asked if any of these cases could be expected to reach the Supreme Court. One seemingly strong argument from industry is that participation in the Medicare program is so essential to marketplace success that it is non-optional and coercive. DOJ’s position that there can be no governmental Taking when a company chooses to participate in a voluntary program is therefore vulnerable.
Baron suggested that, if the industry is successful in one of its cases, the Supreme Court might consider ruling on that issue. “But if we sort of continue down the path in which all the lower courts are ruling against industry, the Supreme Court may be sort of slow to take it up.”
