Healthcare and drug industry groups on Wednesday urged a U.S. appeals court to revive their challenge to a law requiring manufacturers to negotiate the prices of some drugs with the U.S government’s Medicare health insurance program or pay heavy penalties.
Pharmaceutical Research and Manufacturers of America (PhRMA), the Global Colon Cancer Association and the National Infusion Center Association (NICA) sued the government last year, claiming the program, a signature initiative of Democratic President Joe Biden, violated the U.S. Constitution by giving too much power to federal regulators and imposing excessive fines on companies that refuse to participate.
But the arguments before a three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans hinged on a narrower issue: whether a Texas judge was right to throw out the case after concluding that he lacked jurisdiction over it.
U.S. District Judge David Ezra in Austin, Texas, ruled in February that NICA can only pursue its claims through an administrative process for challenging Medicare reimbursement decisions. The organization has said that its infusion center members’ Medicare reimbursements are tied to the prices of drugs they administer, meaning that a ceiling on prices could lead to lower reimbursements.
Because NICA is the only plaintiff based in Texas, the judge said, the other plaintiffs cannot go forward with their lawsuit there without it.
John Elwood of Arnold & Porter Kaye Scholer, arguing for the plaintiffs, told the 5th Circuit panel that the administrative process, which begins within the U.S. Department of Health and Human Services, cannot address NICA’s constitutional claims. He also said it was the negotiation program itself, rather than any loss of money, that the group was challenging.
“We are injured by the decision-making process that is constitutionally invalid,” he said.
Catherine Padhi, a lawyer for the government, said there was no right for healthcare providers to be involved in the government’s decisions about Medicare.
Circuit Judge Jennifer Elrod, who was appointed by Republican former President George W. Bush, appeared sympathetic to the plaintiffs’ arguments. She said the government was using “monopsony power” by forcing companies to negotiate, pay heavy fines or leave Medicare altogether, and that “the (Federal Trade Commission’s) heads would explode” if a private company acted similarly.
“We are injured by the decision-making process that is constitutionally invalid,” he said.
Catherine Padhi, a lawyer for the government, said there was no right for healthcare providers to be involved in the government’s decisions about Medicare.
Circuit Judge Jennifer Elrod, who was appointed by Republican former President George W. Bush, appeared sympathetic to the plaintiffs’ arguments. She said the government was using “monopsony power” by forcing companies to negotiate, pay heavy fines or leave Medicare altogether, and that “the (Federal Trade Commission’s) heads would explode” if a private company acted similarly.