Astellas Withdrew Its Inflation Reduction Act Lawsuit—Will Other Companies Follow?

Pictured: A wooden gavel on a table with a book in the background/iStock, nathaphat

Pictured: A wooden gavel on a table with a book in the background/iStock, nathaphat

Astellas Pharma voluntarily dismissed its lawsuit against the Biden administration earlier this month after its drug Xtandi was not among the initial list of 10 drugs selected for the Inflation Reduction Act’s Drug Price Negotiation Program. While Astellas was the first pharma company to do so, it might not be the last as the legal battle over the IRA has moved to federal court in Ohio with the Department of Justice and U.S. Chamber of Commerce sparring over the law.

The U.S. Chamber of Commerce has requested a ruling on its motion for a preliminary injunction by Oct. 1—the date by which manufacturers of the drugs the Centers for Medicare and Medicaid Services has chosen for the first negotiation round must decide whether to participate.

The Inflation Reduction Act, signed in August 2022, would permit Medicare to negotiate prices for certain prescription drugs. Several pharma companies have filed lawsuits against the federal government to prevent the policy from going into effect. Similar to the Chamber of Commerce, the companies claim that the Drug Price Negotiation Program is unconstitutional as it allegedly amounts to the forced taking of their property without just compensation, while compelling drugmakers to agree that CMS’ prices are fair.  

While Astellas withdrew its suit, the company in a statement said it still believes that the IRA’s price negotiation provision is “bad policy and unconstitutional.” Astellas asserted in its original legal complaint that the IRA violated the First and Fifth Amendments, an argument shared by several other companies. 

Astellas did not state why it withdrew its suit, but it was the only company to file a suit that wasn’t on CMS’ initial price negotiations list. All other pharma companies that filed suit to prevent the provision from going into effect have at least one drug on the list, including Novartis, Merck, AstraZeneca and J&J.  

Michelle Mello, a professor of health policy and law at Stanford University, told BioSpace that Astellas may have withdrawn its lawsuit due to the company not having any grounds to sue. 

“In Astellas’ case, there may have been a standing issue, meaning that once it became clear that none of their products were going to be subjected to negotiation they began to worry whether courts would recognize their right to bring a claim at this time,” Mello wrote in an email statement. She also said she could not speculate on why a particular company might choose to sue, beyond pharma companies generally being opposed to changes to their pricing practices.

Standing has already come up in other legal complaints against the IRA.

In its request for a preliminary injunction, which is currently before the U.S. District Court for the Southern District of Ohio, the Dayton Chamber of Commerce has asked for a judge to halt the Drug Price Negotiation Program before Oct. 1 as it will cause its members “substantial irreparable harm.” The Chamber’s lawsuit specifically calls out AbbVie, which is a member of the business group and markets the drug Imbruvica. Novo Nordisk and Amgen, which also have drugs on the Medicare negotiation list, are also members.

“The IRA’s price controls would cause AbbVie to suffer extremely significant financial harm, and AbbVie is already incurring, and will continue to incur, substantial costs to comply with the IRA’s burdensome requirements,” according to the Chamber of Commerce lawsuit. 

However, in August, the federal government filed a motion to dismiss the case claiming that AbbVie and other Chamber members lacked standing. The reason AbbVie was said to lack standing was because only the primary manufacturer—Pharmacyclics, a subsidiary of AbbVie—will be invited to negotiations. AbbVie’s ownership of Pharmacyclics doesn’t give them the right to sue, the motion stated. The government also argued that the plaintiffs are merely speculating about the risk the IRA poses to drug companies. 

In the first hearing in federal court in Ohio over the IRA’s Drug Price Negotiation Program, the Department of Justice also argued that the Chamber doesn’t have legal standing to challenge the program and the court should throw out the case given that any financial injury to drugmakers wouldn’t happen until 2026, when the negotiated prices take effect. The Chamber has asked Judge Michael Newman to release his ruling on the motion for a preliminary injunction by Oct. 1.

Not having standing for a lawsuit has not stopped other drug companies from making their positions known. In late August, Fresenius Kabi filed an amicus brief in support of J&J’s lawsuit saying that the IRA disincentivizes the production of generics and biosimilars.

“I think there is some concern that if the market for a brand drug is essentially diminished or injured through effectively some form of price setting, that will affect the incentive for a generic or biosimilar to enter the market as well,” said John Bennett, a litigator at Allen & Overy who works with biopharma clients.

Bennett said the Ohio case is one to watch because the judge’s decision may come relatively soon.

For now, most of the legal proceedings are continuing. Novartis was the latest company to file a suit on Sept. 1. BMS, J&J, Merck and PhRMA have all filed for summary judgment in their respective cases. In the meantime, despite filing respective lawsuits challenging the IRA, AstraZeneca and BMS have decided to participate in the first round of Medicare drug price negotiations. 

Nadia Bey is a freelance writer from North Carolina. She can be reached at beynadiaa@gmail.com 

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