Biden v. Big Pharma: Court Showdown Could Derail President’s Effort To Cap Drug Prices Under Medicare

The government has given drug makers of ten top-selling prescription drugs until October 1 to agree to price ceilings or pay prohibitive taxes.

Ten popular medicines would be subject to price caps under the Medicare program scheduled to go into effect October 1. Via

Could a federal judge derail President Biden’s effort to put a ceiling on prescription drug prices? That question was at the center of the first court arguments today in a federal lawsuit against Mr. Biden’s Medicare price controls. The hearing marks the latest salvo in a clash with Big Pharma over Mr. Biden’s proposed caps on drug prices ahead of the 2024 presidential election. 

Today’s court arguments come as federal judges are weighing claims of executive overreach by President Biden, whose administration faces numerous lawsuits claiming he has exceeded his authority on issues ranging from the abortion pill to student loan forgiveness to immigration policy. In the drug price capping plan, though, Mr. Biden has authorization from Congress under the Inflation Reduction Act.

Today’s arguments in the Southern District of Ohio involved a lawsuit brought by the U.S. Chamber of Commerce, which is one of eight groups and companies suing the Biden administration over the drug price caps. 

The government has given drug makers of ten top-selling prescription drugs until October 1 to agree to price ceilings — which the Biden administration calls “negotiated prices” — or the companies must either withdraw from Medicare and Medicaid or face heavy daily taxes. 

The Chamber of Commerce is asking the court, presided over by a Trump-appointed federal judge, Michael Newman, to halt implementation of the price control program before the government’s October 1 deadline, so courts have time to weigh the merits of the case.

The price negotiations were a major legislative win for Mr. Biden, who has touted that “Big Pharma lost.” Any decision to block the program will have “major ramifications,” attorney Zachary Baron, associate director of the Health Policy and the Law Initiative at Georgetown’s O’Neill Institute, tells The New York Sun. 

“When you look at public polling, negotiating the price of prescription drugs in Medicare is tremendously popular,” Mr. Baron said. “If the negotiation program were blocked that would certainly take away a major plank of what I imagine, right now, the Biden campaign intends to campaign on.” 

Rulings for some of the Medicare lawsuits may take months, Mr. Baron says. 

“These are complex constitutional issues and any of the judges writing these opinions also know that there are likely to be appeals, so I think they’re going to take the time that they need to make sure that they’re being thoughtful and measured.” 

The eight lawsuits against the Biden administration share key themes, with several companies alleging the negotiated prices violate the Fifth Amendment by taking their products without fair compensation. 

The drugmakers and trade groups also argue the program infringes on the First Amendment’s free speech protections by compelling them to agree to the prices or face heavy taxes. 

The government’s response earlier this week to one of the lawsuits by Merck, a pharmaceutical company, likely outlines its legal strategy in other cases as well. “Attaching such conditions to a voluntary program neither compels Merck to surrender its property in violation of the Fifth Amendment nor requires it to engage in speech in violation of the First,” the Department of Health and Human Services argues. 

The outcome of the Chamber of Commerce’s case will be the first of “many, many steps” which will affect drug pricing for consumers, Brookings Institute senior fellow, Richard Frank, tells the Sun. 

“Each one of us wears three hats. We’re a patient sometimes, we’re a taxpayer most of the time, and we pay premiums for our health insurance,” Mr. Frank says. “And all three of those get affected by this.” 

Drugmakers argue that the prescription market is working and the negotiations would negatively affect it, Mr. Frank says, which in his view is “nothing further from the truth.”

“I mean it’s a well functioning market if you’re a seller,” Mr. Frank says. “Not such a well functioning market if you’re a buyer.” 

The New York Sun

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