Legal experts indicated they will be paying close attention to lawsuits surrounding the Medicare drug price negotiation program and Braidwood v. Becerra, a case that threatens a key aspect of the Affordable Care Act.
Both topics could have massive ramifications on the healthcare industry and set new precedents government agencies must follow.
“It’s been a year of sweeping agency action,” said Margaux Hall, partner for law firm Ropes & Gray, speaking about 2023 litigation takeaways. “What CMS has done in beginning to stand up the Inflation Reduction price negotiation has been unprecedented. The agency has taken expansive latitude in interpreting the statute in some instances, seemingly rewriting the statute.
“I think in 2024 we’re going to see an intensification of both of these elements,” she added.
Drug price negotiations
The Inflation Reduction Act lawsuits, currently including nine cases brought against the Department of Health & Human Services and the Centers for Medicare & Medicaid Services, mainly by pharmaceutical companies, argue the drug price negotiation program is unconstitutional.
So far, a request for a preliminary injunction in the Dayton Area Chamber of Commerce v. Becerra to halt the pricing program has failed, meaning the program will continue to be implemented while the court cases develop.
“To me, it really lays bare the tough headwinds that these challenges are going to run into as the litigation progresses,” said Andrew Twinamatsiko, co-director of the O’Neill Institute’s Health Policy and the Law Initiative and a creator of the university’s health care litigation tracker.
While the cases vary in detail, drug companies feel the government is overreaching in its authority and that the agency should not be able to set prices. In turn, the program will financially harm companies and stifle much-needed innovation for life-saving drugs, and that there will come a day when more drugs than 10 will need to go through a negotiation process to be eligible for Medicare.
Proponents of the legislation’s drug pricing provision will bring down out-of-pocket costs for customers, as well as promote transparency while saving the Medicare system money. They argue pharma’s complaints that innovation will suffer by reining in a few drugs are exaggerated and unsubstantiated.
Hall predicts the IRA litigation will continue for several years, and that more cases could be filed as the program’s impact continues to become evident. Astellas Pharma voluntarily dismissed its lawsuit after it was revealed their drugs were not one of the 10 selected in the inaugural list released in August. She said that any court decision is likely to be appealed by the other side.
“I think there’s the prospect that there could be a favorable decision from the perspective of a pharmaceutical manufacturer in the life sciences industry,” she explained. “There may actually be multiple positive decisions, but they’re decided favorably on different legal grounds, which also would set the stage for appeals to clarify what the law actually is.”
Twinamatsiko thinks conventional wisdom would uphold the price negotiation program.
“Based on existing precedent, one would predict they are unlikely to prevail,” he said. “But we live in unprecedented times. We’ve seen the courts try to skirt existing precedent or throw out existing precedent. The example is Dobbs v Jackson Women’s Health Organization or affirmative action cases where the courts have ushered in new rules, so you never know.”
Another challenge to the Affordable Care Act
Currently pending before the Fifth Circuit, Braidwood v. Becerra would overhaul how preventative services under the ACA.
Braidwood Management, a for-profit organization owned by Christians, says it should not have to pay more for a health plan that includes these services that the group is religiously opposed to. They are arguing in the Texas court that preexposure prophylaxis (PrEP) medication for HIV prevention violates their religious rights.
The plaintiffs also claim that the ACA requirement mandating insurers and health plans cover preventative services — like cancer screenings, colonoscopies, suicide prevention and tobacco cessation—without cost-sharing is unconstitutional because it violates the appointments clause and the nondelegation doctrine. The nondelegation doctrine states that Congress can’t delegate its power to other entities.
In March, the court ruled in favor of Braidwood. The federal government appealed the decision in May, prompting the court to issue an administrative stay of the court’s ruling and allowing the government to continue enforcing the requirement while the case is reviewed, according to KFF.
This is the latest legal battle against the ACA. In the 2014 Supreme Court case Burwell v Hobby Lobby Stores, the court ruled in favor of the plaintiffs that covering PrEP violates employers’ religious rights, a precedent that the Fifth Circuit and Judge Reed O’Connor have used in the Braidwood case.
More than 150 million people take advantage of these benefits each year. It’s expected health outcomes would plummet if people would be forced to pay for preventative services once again, as individuals would be less likely to detect diseases.
“Early detection of cancer, for example, and prevention of diseases ensures the long-term costs are mitigated, and ‘it has been increased in use of the services by marginalized communities,” said Twinamatsiko. “I think the impact would be tremendous.”
Groups including the American Cancer Society, American Medical Association, HIV Medicine Association, Blue Cross Blue Shield Association, AARP, SEIU, AIDS Healthcare Foundation, the National Women’s Law Center and others all have submitted amicus briefs in support of the defendants.
“Courts are sometimes unpredictable, so I can’t really tell with even some semblance of certainty on how things are going to go,” he said.
Oral arguments for the case are not yet scheduled.