The U.S. Chamber of Commerce filed a lawsuit this month in U.S. District Court in Dayton, Ohio, arguing that the price-negotiation program created under last year’s Inflation Reduction Act. is unconstitutional, violating due proces and other protections.

The Chamber lawsuit was filed just days after pharmaceutical giant Merck & Co. filed a similar federal lawsuit in the U.S. District Court the District of Columbia in early June. Merck alleges the negotiation setup is a violation of the Fifth Amendment, which requires the government to fairly compensate companies or individuals for property that is used for the public good among other theories.

Then last Friday, Bristol Myers Squibb filed a similar lawsuit in the U.S. District Court for the District of New Jersey.

As part of the Inflation Reduction Act (IRA) passed last summer, Congress established something called the “Drug Price Negotiation Program” for Medicare.

The Program’s name suggests a framework under which federal officials sit down with prescription drug manufacturers and negotiate voluntary price agreements that will save money for American taxpayers while ensuring that the companies remain able to continue investing billions of dollars into research and development of new life-saving medicines. Under the Inflation Reduction Act, Medicare will begin negotiating prices for the drugs that it spends the most on beginning in 2026.

This provision amends Medicare’s noninterference clause – which prevents the secretary of the U.S. Department of Health & Human Services (HHS) from interfering with negotiations between drug manufacturers, pharmacies and Medicare prescription drug plans – and establishes a new Drug Price Negotiation Program.

Days after the IRA was passed, the biopharma industry blasted the policy.

According to an analysis by PhRMA “These polices are expected to have a negative impact on access to medicines covered by Medicare Part B and Part D, in addition to discouraging continued drug development.”

“Biopharmaceutical research companies are having to rethink how and where they invest in medical R&D, with the government essentially picking winners and losers by discouraging the development of some types of medicines and treatments for certain patient populations.”

According to a white paper published by the University of Southern California Schaeffer Center for Health Policy and Economics last April, the Centers for Medicare and Medicaid Services (CMS) released additional information for the Medicare Drug Price Negotiation program in March 2023, “but how CMS will implement a key feature – the ‘maximum fair price’ – remains unclear.”

It suggests that “the calculation of a ‘maximum fair price’ for drugs should be transparent and focus on measured social value rather than price minimization.”