The US Court of Appeals for the Fifth Circuit is reviving PhRMA’s legal attack on Medicare drug price negotiations.
On Friday, the appeals court reversed a lower court’s ruling from earlier this year that had dismissed PhRMA’s lawsuit before it even took shape.
Back in June 2023, PhRMA, the National Infusion Center Association and the Global Colon Cancer Association sued CMS over its new drug price negotiation program, claiming the penalties were unconstitutional, among other issues. In February, however, the west Texas federal district court threw out the case, saying NICA lacked standing and that the court was an improper venue.
The first ten drug prices under the program were announced last month.
Now the Fifth Circuit is saying NICA does have standing, and that the district court has the appropriate subject-matter jurisdiction over NICA’s claims, according to the opinion.
Part of the argument that had to be overturned has to do with claims arising under the Medicare Act, which must be “channeled” through the relevant agency (i.e. HHS) before they can be challenged in federal court. The district court said PhRMA needed to take this channeling route. But the Fifth Circuit ruled that NICA didn’t need to, partly because it’s challenging a provision of the Inflation Reduction Act, not the Medicare Act.
Circuit Judge Irma Carrillo Ramirez, who wrote an opinion concurring in part and dissenting in part, countered that “even if NICA had standing, its claims cannot be disentangled from the Medicare Act. For providers, the IRA has no significance outside of Medicare reimbursements. The Medicare Act therefore provides both the standing and the substantive basis for NICA’s due process claim, and because it arises under the Medicare Act, it must be channeled through HHS.”
Nicole Longo, Pharma’s DVP of Public Affairs, told Endpoints News via email, “We are pleased the Fifth Circuit agreed that the merits of our lawsuit challenging the IRA’s drug pricing provisions should be heard. The price setting provisions give the administration broad authority to set the price of medicines with virtually no guardrails, block any true transparency and accountability in the process and rely on an unreasonable and excessive enforcement mechanism to force compliance.”