Amicus Brief Urges D.C. District Court to Protect Innovation by Rejecting Unlawful CMS Guidance on the IRA’s Drug Price Negotiation Program

• In a case with major implications for innovators in the biopharma industry, an Orrick team has filed an innovators’ amicus brief supporting a challenge brought by Teva Pharmaceuticals.
• The brief, filed on March 14, 2025, on behalf of Bausch Health Companies Inc., Eli Lilly and Company, Johnson & Johnson, Pfizer Inc., Sanofi-Aventis U.S. LLC, and the Biotechnology Innovation Organization, urges the U.S. District Court for the District of Columbia to reject the Center for Medicare & Medicaid Services’ guidance on implementing the Inflation Reduction Act’s Drug Price Negotiation Program (DPNP).
• The IRA allows CMS to effectively set prices for certain top-spend medications, with manufacturers having no choice but to accept them. CMS exacerbated the DPNP’s one-sided nature by promulgating a guidance that sweeps in medications that Congress did not intend to subject to the IRA’s price controls.
• The brief argues that the CMS guidance is unlawful because it expands the DPNP beyond recognition, exceeding the agency’s authority under the IRA. Congress only sought to price-control certain medications that had been approved and marketed under their respective approvals for at least seven years (for small molecules) or 11 years (for biological products). But the guidance disregards this ineligibility period, subjecting newly approved products to the IRA’s price controls so long as they share the same active moiety as another marketed drug from the same manufacturer that the FDA approved at least seven or 11 years ago.
• The brief illustrates how the CMS guidance will deprive innovators of competitive returns for their life-saving products. It explains that “medications that achieve commercial success after extensive R&D enable the next generation of innovation.” Thus, “if a product becomes eligible for price control prematurely—or for that matter, immediately upon approval—a manufacturer is unlikely to recoup its development costs for the newly approved product.” The CMS guidance does just that: “It upends the incentives that make those innovations possible”—to the public’s detriment.

The Orrick team on the amicus effort is led by partners Irena Royzman, Clement Roberts, Alyssa Caridis and Andrew Silverman, counsel Cesar Lopez-Morales and managing associate Emily Minton Mattson.