In a recent move, Astellas Pharma challenges IRA, a step that sees them join other pharmaceutical heavyweights in a lawsuit against the federal government. The bone of contention is the Inflation Reduction Act (IRA), a law primarily designed to drive down prescription drug prices, a proposition that no Republican supported.

Astellas, along with the other pharma companies, takes issue with the IRA’s plan to let Medicare negotiate prices on their top-selling drugs. They argue this will not only be financially burdensome but also stifle new drug development and breach their constitutional rights.

Constitutional violations: Astellas Pharma challenges IRA

Astellas Pharma, in its public statement last week, outlined three ways in which it believes the new Medicare Drug Price Negotiation Program is in violation of the Constitution. The key concern is that it’s essentially theft or a “taking of property” by forcing companies to offer lower prices. The second issue is the perceived lack of due process since Medicare is setting prices without any real negotiation. Lastly, the company posits that this approach infringes on free speech by compelling companies to vouch for “fair prices” that they deem false.
Simultaneously, companies like Merck and Bristol Myers Squibb echo the violations of the First, Fifth, and Eighth Amendments. Likewise, the industry lobby PhRMA has initiated a lawsuit against the Biden administration, suggesting that the IRA’s drug pricing provisions are unconstitutional infringements on drug companies’ rights. Their multi-pronged legal strategy targets different aspects of the law, ranging from price negotiations to inflation rebates.

Despite its objections, Astellas does concede support for some IRA provisions, such as the cap on out-of-pocket drug costs for seniors. However, the prospect of negotiating prices with Medicare is non-negotiable.

As more and more drug companies join the fray against the IRA, it’s increasingly likely that this legal conflict may find its way to the Supreme Court. The outcome of this case could very well redefine the U.S. drug industry and impact what patients end up paying at the pharmacy counter.

Politics and drug pricing

The call for reducing drug prices is one of the few issues uniting Democrats and Republicans. If Trump were re-elected, he would likely pursue the executive orders he previously inked to cut drug prices. This includes allowing the importation of medicines from other countries, tying Medicare drug prices to lower international rates, and passing on drug discounts directly to patients at the pharmacy counter.
The practicality and legality of some of Trump’s orders, however, are still up in the air. The pharmaceutical industry and several experts express concerns over the safety of importing drugs from abroad, arguing that it is not currently permitted under existing law.

The pharma industry also opposes the idea of aligning U.S. prices with foreign benchmarks, insisting that it would inhibit innovation. There are legal and practical obstacles to basing U.S. prices on those from overseas, creating another point of contention in the industry.