The fact that the new drug price ne­go­ti­a­tions for cer­tain block­buster Medicare drugs — due for a par­ti­san thumbs up in the US House of Rep­re­sen­ta­tives on Fri­day and a sig­na­ture from Pres­i­dent Joe Biden soon af­ter — don’t take ef­fect un­til 2026 means there’ll be plen­ty of time for PhRMA and oth­ers in bio­phar­ma to weigh their le­gal op­tions.

But what PhRMA or any bio­phar­ma com­pa­ny may po­ten­tial­ly sue over will be the key, as le­gal ex­perts point to the com­pli­cat­ed ne­go­ti­a­tions side of the rec­on­cil­i­a­tion bill, which be­gin­ning in 2026 would kick off these price con­ces­sions for 10 of the most ex­pen­sive sin­gle-source drugs in Medicare’s Part D pro­gram, build­ing up to about 60 drugs from both Part D and B by 2030, with prices gen­er­al­ly capped by at least 40%.

Con­sid­er­able at­ten­tion by Con­gress has been paid to small­er com­pa­nies and drugs and bi­o­log­ics with im­pend­ing com­pe­ti­tion. For in­stance, in 2029 and 2030, there would be a max­i­mum fair price floor of 66% of the av­er­age non-FAMP for small biotech com­pa­nies’ bi­o­log­ics (com­pared to 75% for most drugs that have been on the mar­ket for less than 12 years), ac­cord­ing to the law firm Hogan Lovells.

Still, if man­u­fac­tur­ers fail or de­cline to com­ply with the ne­go­ti­a­tion process, they would be sub­ject to a sig­nif­i­cant ex­cise tax (build­ing up from 65% of a drug’s sales to 95%), which is a stick so large that it could po­ten­tial­ly run afoul of the ex­ces­sive fines clause of the Eighth Amend­ment of the Con­sti­tu­tion, le­gal ex­perts said.

“As­sum­ing the ex­cise tax is not au­tho­rized by Con­gress’s tax­ing pow­er alone and is ac­tu­al­ly a means of en­forc­ing a reg­u­la­to­ry drug pric­ing statu­to­ry scheme, it could be viewed as a puni­tive mea­sure sub­ject to the Ex­ces­sive Fines Clause,” the Con­gres­sion­al Re­search Ser­vice wrote in a re­port back in 2019 on a sim­i­lar drug pric­ing bill from House Speak­er Nan­cy Pelosi. The CBO added:

On one hand, the ex­cise tax could be viewed by a court as hav­ing the re­me­di­al func­tion of claw­ing back a por­tion of a drug man­u­fac­tur­ers’ gains de­rived from the sale of a drug dur­ing a non-com­pli­ance pe­ri­od, thus sug­gest­ing that it is not puni­tive. On the oth­er, the size of the tax and the fact that it is im­posed on­ly when a man­u­fac­tur­er is in a state of non-com­pli­ance could lead a court to con­clude that the tax is “at least in part …’puni­tive.'”

Rachel Sachs

But Rachel Sachs, a law pro­fes­sor at Wash­ing­ton Uni­ver­si­ty in St. Louis, who thinks PhRMA may file suit over the ne­go­ti­a­tions pro­vi­sions, not­ed there al­so may be a stand­ing prob­lem, par­tic­u­lar­ly if a com­pa­ny can’t show with suf­fi­cient speci­fici­ty that one of its drugs is like­ly to be the sub­ject of ne­go­ti­a­tion.

That could take sev­er­al years. If the bill pass­es, the HHS Sec­re­tary would have to pub­lish the list of drugs se­lect­ed for ne­go­ti­a­tion by Feb. 1 of the year which is two years be­fore the year at is­sue (e.g., list re­leased on Feb. 1, 2026, for price ne­go­ti­a­tions be­gin­ning in 2028), ex­cept the list would be pub­lished by Sept. 1, 2023, for ne­go­ti­a­tions start­ing in the first year, 2026.

Bri­an Sko­r­ney

Oth­ers like Baird an­a­lyst Bri­an Sko­r­ney told End­points that he thinks PhRMA et. al. “will try and find some­thing” to sue over, and he’s not sure that they’ll be suc­cess­ful.

“Ob­vi­ous­ly if a se­mi-rea­son­able ar­gu­ment could find its way to the Supreme Court, I could see the pro­vi­sion get­ting struck down. But I just don’t see it,” he said.

Sean Dick­son, di­rec­tor of health pol­i­cy at West health, told End­points that “giv­en that the Act’s ap­proach is sim­i­lar to the Med­ic­aid pro­gram where man­u­fac­tur­ers are re­quired to sell their drug at $0.00 and will soon ac­tu­al­ly be tak­ing a loss on cer­tain drugs, it seems un­like­ly that the rev­enue re­duc­tions here would con­sti­tute a col­orable claim while the long his­to­ry of Med­ic­aid re­bates does not.”

A spokesper­son from in­dus­try group BIO told End­points:

This is a large, com­plex piece of leg­is­la­tion that will have com­pli­cat­ed im­ple­men­ta­tion, un­in­tend­ed con­se­quences, and pow­er­ful co­er­cive penal­ties if it pass­es as ex­pect­ed.  While it is pre­ma­ture to com­ment on any spe­cif­ic po­ten­tial fu­ture lit­i­ga­tion on a piece of leg­is­la­tion that hasn’t been signed in­to law, BIO will con­tin­ue to ex­plore all av­enues to pro­mote and de­fend in­no­v­a­tive sci­ence in any venue.

“While it’s pre­ma­ture to spec­u­late be­fore the bill has passed, we will ex­plore every op­por­tu­ni­ty – in­clud­ing leg­isla­tive, reg­u­la­to­ry and le­gal – to make sure pa­tients have ac­cess to the med­i­cines they need and our in­dus­try can con­tin­ue to de­vel­op life­sav­ing cures and treat­ments,” a PhRMA spokesper­son added to End­points.

PhRMA al­so re­cent­ly took is­sue with the way in which De­moc­rats added an­oth­er op­tion for com­pa­nies that don’t want to com­ply with the ne­go­ti­a­tion process, which was first not­ed in a ver­sion of the bill cir­cu­lat­ed around Ju­ly 28.

A PhRMA spokesper­son told End­points and oth­er me­dia out­lets that, “Buried in the bill passed by the Sen­ate this past week­end, the leg­is­la­tion now in­cludes a sec­ond non-ne­go­tiable ul­ti­ma­tum for man­u­fac­tur­ers: pay the 95% tax or with­draw ALL their med­i­cines from the Medicare and Med­ic­aid pro­grams.”

Alex Law­son

But some ex­perts not­ed that while new, this ei­ther/or lan­guage may ac­tu­al­ly help small­er bio­phar­ma com­pa­nies, es­pe­cial­ly for those with on­ly one drug that doesn’t want to ne­go­ti­ate, or pay the tax, and can now just walk away from the ta­ble en­tire­ly.

Oth­ers who worked on craft­ing the bill al­so think that giv­en PhRMA’s track record in fight­ing state-based drug pric­ing leg­is­la­tion, this time will be no dif­fer­ent.

“Phar­ma nev­er gives up. They will fight to the last sec­ond and spend to their last dol­lar to pro­tect their rack­et. And still, we are go­ing to beat them,” Alex Law­son, ex­ec­u­tive di­rec­tor of the non­prof­it So­cial Se­cu­ri­ty Works, told End­points.

President Joe Biden made clear in his “finish the job” State of the Union address last night that one of those jobs to be finished is insulin prices.

Biden’s push again to tackle insulin prices, after Republicans rebuffed the idea last summer and just after Biden won Medicare drug price negotiations/caps via the Inflation Reduction Act, shows how heavily he’s leaning into this work.

Six weeks into his new role at the helm of Teva Pharmaceutical, Richard Francis said it’s time to “get back to growth,” starting with a good look at the company’s priorities.

The chief executive has kicked off a strategic review, he announced during Teva’s quarterly call, which will continue over the next several months and produce results sometime in the middle of 2023. That means some pipeline cuts may be in store, he told Endpoints News, while declining to offer much more detail.

We now know where Roche’s ex-pharma chief Bill Anderson is going.

German pharma giant Bayer announced Wednesday that Anderson will be taking on the role as CEO, less than six weeks after Anderson stepped down from his perch at Roche as head of the group’s pharmaceutical division.

Roche announced back in December that Anderson would depart on Dec. 31 to “pursue opportunities outside of Roche.” His replacement, Genentech vet and Roche’s current head of global product strategy, Teresa Graham, will start her role in March.