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AARP Urges Court to Declare Medicare Drug Price Negotiations Constitutional

New law gives older Americans relief from excessive prices, legal brief says

spinner image a man holds a sign that reads stop drug company greed, lower drug prices now, during a protest outside the jones day offices in manhattan
Activists rally against drug companies that are suing to stop Medicare drug price negotiations.
Erik McGregor/LightRocket via Getty Images

Millions of older Americans will be able to afford life-sustaining prescription drugs under a landmark law that for the first time allows Medicare to negotiate the prices of some expensive medications. That provision must be allowed to stand, AARP and AARP Foundation say in a legal brief filed Sept. 18 in a District of Columbia federal court.

Just as the negotiation process for the first 10 prescription drugs is getting underway under the Inflation Reduction Act (IRA), AARP has filed an amicus brief in a lawsuit brought against the U.S. Department of Health and Human Services (HHS) by pharmaceutical giant Merck & Co. The drugmaker is asking a federal judge to declare the historic Medicare negotiations provision unconstitutional. 

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The lawsuit is one of a growing number of legal challenges filed so far by drug companies and business groups in an attempt to derail the drug negotiation portion of the IRA. 

Merck’s diabetes drug Januvia is among the first 10 medications slated for price negotiations. According to AARP, the list price of Januvia has increased by 275 percent since it entered the market in 2006, and the drug accounted for $21.6 billion in Medicare Part D spending between 2017 and May 2023.

Also filing lawsuits against the negotiation program are PhRMA (the drug industry’s trade association), the U.S. Chamber of Commerce, Bristol Myers Squibb Co., Johnson & Johnson, Astra Zeneca, Boehringer Ingelheim and Novartis Pharmaceuticals. 

This is the second legal brief from AARP and AARP Foundation asking federal courts to maintain the provision of the new law that AARP and other advocates have long fought for. AARP filed an amicus brief in August urging an Ohio federal court to deny a request by the U.S. Chamber of Commerce to prevent the Centers for Medicare & Medicaid Services (CMS) from implementing the negotiation process. On Sept. 29, the court denied the chamber’s request, which means the Medicare prescription drug negotiations process can proceed. Negotiations are scheduled to get underway in October, with negotiated prices to take effect in 2026.

Drug negotiations key to new law

The latest AARP brief says that the “Medicare drug price negotiation program is the cornerstone of the law because it addresses the central problem — out of control drug prices.” The brief also says that “Merck seeks to protect the pharmaceutical industry’s ability to charge unreasonable and astronomical prices at the expense of what people with chronic conditions need to survive. Its efforts threaten the financial health of Medicare.”

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Until passage of the new drug law, Medicare was barred from negotiating the prices of prescription drugs. Merck, the brief says, wants drug companies “to once again obtain a special exemption which no other health care provider group has that would allow drug companies to charge Medicare and its beneficiaries whatever price they want for their products.”

Every year, Medicare spends more than $130 billion for prescription drugs. The nonpartisan Congressional Budget Office (CBO) estimated that the Medicare drug price negotiation program will save Medicare and American taxpayers nearly $98.5 billion over 10 years.

“Allowing HHS to negotiate Medicare drug prices is imperative because, without it, drug companies will continue to set prices at exorbitant levels,” the brief says. “This, in turn, will ultimately deny older people access to critical medications, increase premiums, and jeopardize Medicare’s sustainability.”

Research shows that Medicare enrollees, on average, take four to five medications each month and about 80 percent have at least two chronic conditions that require them to take prescription drugs to survive. “The vast majority of Medicare beneficiaries have chronic conditions that require lifelong treatment,” the new brief says.

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 Delaying law would hurt older Americans

“Under the law, millions of older people already have to wait until 2026 to start benefiting from Medicare-negotiated prices,” AARP Foundation Litigation’s brief in the Ohio case says. Though the negotiation process has started, any negotiated prices wouldn’t take effect until 2026. “A preliminary injunction would make them wait even longer,” the brief says. “Older people cannot afford to wait.”

Under federal law, one reason a judge could grant such an injunction is if it’s in the public interest to do so. “Stopping the drug price negotiation program before it even begins is not in the public interest,” the brief says. “On the contrary, it will only reinforce the substantial harm that the IRA is meant to prevent.”

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Delaying implementation of the law would have far-reaching effects beyond what it would mean for current Medicare beneficiaries. “We have to start the process so that the Medicare program is sustainable long into the future,” says Kelly Bagby, a vice president at AARP Foundation Litigation.

The Ohio court’s decision on whether to grant an injunction is the furthest along of the legal challenges to the IRA. The judge in that case had been asked to rule by Oct. 1. Lawsuits have been brought in federal district courts in Connecticut, Delaware, Ohio, Texas, New Jersey, Illinois and the District of Columbia. If judges in these jurisdictions issue conflicting rulings, the issue could be decided by the U.S. Supreme Court.

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