Drug Pricing Rules Will Likely Be Challenged

Pharmaceutical companies that fought drug pricing reforms Congress passed as part of the Inflation Reduction Act are now weighing a legal challenge as the Biden administration sets about implementing the policy.

  • “I don’t think we’ve made any decisions at this time, but it’s certainly something we’re looking into,” Lori Reilly, the Pharmaceutical Research and Manufacturers of America’s chief operating officer, said during a Wednesday meeting with reporters.

Driving the news: The pharmaceutical industry takes issue with many parts of the proposed negotiation process.

  • PhRMA, the industry’s big Washington trade group, says the Centers for Medicare and Medicaid Services rushed guidance on negotiations out the door. Additionally, the agency should have let stakeholders comment on an already-final section about which medications would be affected.
  • PhRMA outlines several other concerns in a 76-page document submitted to regulators, and even argues that elements of the policy would violate the First Amendment if finalized as proposed.

What they’re saying: “CMS cares a lot more about punishing us … than capturing what patients care about or hearing them out or protecting their access,” said Lauren Neves, deputy vice president of policy and research at PhRMA.

Flashback: The IRA aims to lower drug costs through steps like capping out-of-pocket prescription costs in Medicare and enables Medicare to directly negotiate with drug manufacturers for some of the most costly drugs.

  • Other drugs will be subject to price negotiation measures to keep costs down for consumers and the Medicare program.
  • CMS has started implementing the drug pricing part of the new law, and public comment on the proposals closed last week. The first new prices will take effect on Jan. 1, 2026.

PhRMA says that price negotiation will stifle innovation in their industry. Only a portion of drugs are actually profitable, Reilly said.

  • “It’s of particular concern, for an industry where there is a lot of failure, that the bill is very focused and targeted on those handful of medicines that actually do make it to market and are profitable,” she added.

What’s next: CMS will announce the first 10 drugs selected for the drug price negotiation program by Sept. 1.


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