NICA, GCCA, PhRMA Litigation Asserts Price Setting Provisions in the Inflation Reduction Act are Unconstitutional

WASHINGTON, D.C. (June 21, 2023) – Today, the National Infusion Center Association (NICA), the Global Colon Cancer Association (GCCA) and the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a complaint in U.S. District Court for the Western District of Texas asserting the price setting provisions in the Inflation Reduction Act are unconstitutional. 

The statute includes no requirement for checks and balances through public feedback and cuts off administrative and judicial review, violating the Constitution’s separation of power and due process clauses. Additionally, the statute includes an extreme excise “tax” to force manufacturer compliance with the government mandated price that is disproportionate to the purported offense making it an excessive fine prohibited by the Eighth Amendment. Taken together, these claims clearly demonstrate the price setting provisions should be declared unconstitutional.

NICA Chief Executive Officer Brian Nyquist stated:

“NICA supports lower costs for patients, but infusion providers have no control over setting the prices of the medications they administer. NICA’s members have an interest in being adequately reimbursed for the treatments they provide, and they have an interest in continuing to operate their healthcare business. The government price setting provisions in the IRA may inadvertently set reimbursement below acquisition cost, exacerbating existing consolidation trends and reducing our nation’s community-based infusion capacity. This would leave patients with the hospital as their only option – which is by far the most expensive setting. A recent analysis projected an almost 50% average reduction to add-on payments across all office-based infusion centers because of the price setting provisions, which is an overnight drop in income few businesses could survive. That is why we felt that litigation was our only option to protect our members from the unintended consequences of the Inflation Reduction Act and to preserve access to community-based infusion centers.”

GCCA Executive Director Andrew Spiegel stated:

“The rate of colorectal cancer in Americans under 55 has nearly doubled since the 1990s, and scientists don’t really know why. In less than 7 years, colorectal cancer is predicted to become the leading cause of cancer deaths for people under 50, and it is already the second leading cause of all cancer deaths, behind only lung cancer. We need more and better treatments, and we need them now. The price setting provisions in the IRA thwart the progress we have made and lead to less hope for patients battling this disease. To make matters worse, the IRA is implementing a process where patient voices and concerns have no real seat at the table. Our patients deserve better, and that’s why we have joined this lawsuit today.”

PhRMA President and CEO Stephen J. Ubl stated: 

"The price setting scheme in the Inflation Reduction Act is bad policy that threatens continued research and development and patients’ access to medicines. It also violates the U.S. Constitution because it includes barriers to transparency and accountability, hands the executive branch unfettered discretion to set the price of medicines in Medicare and relies on an absurd enforcement mechanism to force compliance. We hope the court recognizes the serious concerns raised and declares the price setting provisions unconstitutional.”

Additional Information:

The price setting provisions in the Inflation Reduction Act should be declared unconstitutional because of the following violations.

• Separation of Powers: Congress has impermissibly delegated broad authority to HHS to set prices within Medicare with no meaningful constraints on the agency’s exercise of this new price-setting authority. This is in conflict with fundamental separation-of-powers and nondelegation principles in the Constitution. 
• Due Process: Unlike virtually any other statutory program affecting the public, the price setting scheme denies manufacturers the right both to front-end input on how the policy will be implemented and to back-end judicial or administrative review after critical implementation decisions have been made. And HHS has proposed in guidance to make the process even less transparent, preventing manufacturers from disclosing any information about the price setting process. This violates the Plaintiffs’ and their members’ Fifth Amendment due process rights.
• Excessive Fines: The excise tax aims to force manufacturer compliance with the price setting scheme by imposing a staggering tax that serves as a severe penalty that violates the Eighth Amendment’s Excessive Fines Clause. Imposed each day that a manufacturer has not agreed to “negotiate” it increases swiftly to 1,900% of a drug’s total sales revenues.

The complaint seeks the following relief:

• Declare that the IRA price setting scheme violates nondelegation and separation-of-powers principles and is unconstitutional
• Declare that the IRA excise tax violates the Eight Amendment Excessive Fines Clause and is unconstitutional
• Declare that the IRA price setting scheme violates Plaintiffs’ and their members’ Fifth Amendment due process rights and is unconstitutional
• Enjoin HHS from implementing the IRA price setting scheme in a manner that does not incorporate adequate procedural processes, including the opportunity for public notice and comment regarding key implementation decisions and for judicial review regarding issues of statutory interpretation
• Enjoin the government from enforcing the IRA excise tax

A more detailed summary and the full complaint can be found here. 

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NICA Contact: media@infusioncenter.org 

GCCA Contact: David White 
david@keybridge.biz

PhRMA Contact: Sarah Ryan
sryan@phrma.org