Bristol Myers Squibb has launched a landmark lawsuit against the Biden administration, challenging Medicare’s newfound powers to negotiate drug pricing under the Inflation Reduction Act. This act reflects a worldwide trend in governments attempting to control healthcare costs, specifically targeting the pharmaceutical sector, which has often been criticized for high drug pricing.
The lawsuit, filed in the federal district court in New Jersey, is particularly significant given that pharmaceutical companies have historically found success in pushing back against government regulations via the legal system. In the suit, Bristol Myers Squibb alleges that the Medicare negotiations infringe upon the First and Fifth Amendments of the U.S. Constitution. This argument presents a novel legal approach in the healthcare sector, potentially setting a precedent that could reshape the industry’s landscape.
Interestingly, Bristol Myers Squibb isn’t alone in its stance. The company’s arguments echo those previously lodged by Merck, suggesting an industry-wide legal strategy against the Inflation Reduction Act. Even outside the pharmaceutical sector, the U.S. Chamber of Commerce also filed a lawsuit against the Department of Health and Human Services (HHS) using similar arguments, indicating broader business community concerns about the potential for government overreach in pricing mechanisms.
The Inflation Reduction Act, passed in 2022, signifies a tectonic shift in healthcare policy. For the first time in the program’s six-decade history, Medicare is empowered to negotiate drug pricing. The law is a critical element of the Biden administration’s efforts to control rising drug prices. The administration’s approach aligns with a global shift towards cost containment measures in healthcare, mirroring efforts in countries like Canada and the United Kingdom. The outcome of these lawsuits, therefore, holds the potential to significantly impact future healthcare policy in the U.S. and beyond.
Among Bristol Myers Squibb’s portfolio, two significant revenue drivers, Eliquis and Opdivo, are poised to come under the purview of these negotiations. These drugs are critical to Bristol Myers Squibb’s financial health, and their potential price reduction could impact the company’s profitability and ability to invest in research and development. It’s crucial to remember that the outcome of this lawsuit won’t just affect Bristol Myers Squibb. If Medicare is successful in negotiating down prices, the repercussions will ripple through other pharmaceutical companies with high-revenue drugs, potentially transforming the entire business model of the industry.
Bristol Myers Squibb’s contention that these government-mandated price negotiations constitute a violation of the Fifth Amendment protection against seizure of private property without just compensation broadens the traditional interpretation of this constitutional protection. If upheld, this argument could shield businesses from a variety of government regulations deemed to unduly impact profitability. Similarly, their First Amendment claim against being forced to present the program as a fair price negotiation could set a precedent that significantly impacts government-industry interactions beyond just the healthcare sector.
The government’s strong defense of the Inflation Reduction Act suggests a willingness to stand by its healthcare cost containment strategies, despite the opposition. HHS Secretary Xavier Becerra and White House Press Secretary Karine Jean-Pierre expressed confidence in the law’s legality, indicating that the Biden administration is prepared to fight for its implementation. A successful defense could embolden the government to pursue even more aggressive policies in the future to control healthcare costs, affecting not only the pharmaceutical industry but the broader healthcare sector.