How Big Pharma is Misleading You


The lies behind big drug companies’ bogus lawsuits

Big drug companies are suing to stop the Inflation Reduction Act’s core provision of giving Medicare the power to negotiate lower drug prices.


They have also started a campaign of lies in an attempt to persuade people that allowing Medicare to negotiate lower prices will prevent drug companies from introducing innovative drugs. But innovation isn’t really what the drug companies are worried about – they just want to protect their profits, continue to line their CEOs’ pockets, and take advantage of patients.

How are big drug companies misleading you to get out of negotiating for lower drug prices?

#1: Despite long-standing precedent, the drug companies argue that the government shouldn't regulate them.

Big drug companies want to maintain their chokehold on Medicare’s budget, claiming that the Department of Health and Human Services lacks the authority to negotiate the conditions of the program.

The Facts: There is a long-standing precedent for this program. The Department of Veterans Affairs (VA) has been able to negotiate prescription drug prices since 1992, paying around 54 percent less for drugs than Medicare, and Congress has already delegated broad authority to Medicare without judicial review in at least 25 instances.

#2: Big drug companies think Medicare is constitutionally required to pay whatever prices corporations set.

Big drug companies claim that they have a constitutional right to price gauge as much as they want for drugs that have been on the market for decades without competition – and Medicare is required to foot the bill.

The Facts:  Drug companies want to continue the status quo of having their greed unchecked by unilaterally setting prices Medicare is required to pay. For too long, the industry has been able to exert unprecedented power and deprive Americans of a fair market price for drugs. Medicare is NOT constitutionally required to pay whatever prices drug companies set – the only reason they did not have to negotiate sooner is that Republicans have been giving concessions to the powerful drug industry, barring Medicare from negotiating drug prices in a 2003 bill amending Medicare.

#3: Big drug companies don't think they should have to play by the rules and think they should be immune from lawful price regulation.

Drug manufacturers and their allies have fought hard against the idea that they should be subject to any pricing regulations set by the government.

The Facts: Drug companies – and businesses in general – are not constitutionally shielded from lawful price regulations. Doctors who choose to participate in Medicare are paid according to a pricing schedule determined by the government, for example.

#4: Big drug companies don’t want Medicare to have a say in setting drug prices.

Instead of demonstrating their willingness to participate as equal parties in a fair negotiation process, greedy drug companies want to paint themselves as victims of a so-called price-setting scheme.

The Facts: Big drug companies are private entities with enormous market power because they are the sole manufacturers of drugs that millions of Americans depend on. The negotiation program is merely a pathway for Medicare to negotiate – rather than blindly accept – prices paid for a limited number of specified drugs through a regulated, market-driven process. The Inflation Reduction Act does not impose price controls or set the market rate for drug prices.

#5: Big drug companies think Medicare shouldn’t be allowed to attach certain conditions and language to its own funding and programs.

Big drug companies are so desperate to protect profits that they distort constitutional rights, falsely claiming that the government cannot require participating companies to sign agreements to negotiate maximum fair prices for products sold through Medicare.

The Facts: The drug companies subject to negotiation are already contracted with Medicare and have always been required to follow rules and regulations set by the program. Medicare’s authority to attach certain conditions and language to its own funding and programs has been upheld by both state and federal courts, and the Supreme Court has previously explained that these conditions do not violate the First Amendment – even if private actors disagree with those conditions and language.

#6: Even though they can opt-out, big drug companies argue they are required to participate in Medicare.

Big drug companies want consumers to believe that participation in Medicare is a mandatory part of conducting business in their industry and that the drug negotiation program leaves them with no other options.

The Facts: The Inflation Reduction Act lets companies decide whether or not they wish to participate and leaves companies to decide which path makes the most economic sense for them. The drug negotiation program does not force drug companies to enter into agreements against their will; participation in Medicare is completely voluntary, and big drug companies do not have a constitutional right to dictate the prices they pay without a fair market negotiation.

#7: Big drug companies think they shouldn’t have to pay fines for violating their agreements to participate in Medicare and refusing to negotiate drug prices.

Even though they signed contracts with Medicare, big drug companies making record profits are saying they should not have to pay fees for refusing to provide the necessary information and documents required to facilitate the negotiation process.

The Facts: Drug companies can avoid fines by simply complying with the negotiation process or exiting the Medicare and Medicaid programs when contracts expire. These fines are also not unprecedented – several provisions in the Tax Code impose similar large excise tax assessments, some even more than 100% of the amount involved.

Right now, millions of people are benefiting from the Inflation Reduction Act’s provisions to drive down health care and prescription drug costs, but big drug companies and their allies are in the courts trying to dismantle the Inflation Reduction Act’s core provision of giving Medicare the power to negotiate lower drug prices.

What’s At Stake?

These lawsuits seek to end Medicare’s new ability to negotiate lower prescription drug prices for Medicare beneficiaries. If the big drug companies get their way patients will pay more so the drug companies can make more money:

  • GONE: Medicare’s power to negotiate lower prices for the most popular and expensive prescription drugs. Under the Inflation Reduction Act, Medicare is set to begin negotiating prices for 10 of the top 50 most expensive Part D drugs in 2026, adding another 15 drugs in 2027 and 2028, and another 20 in 2029 and subsequent years.
  • GONE: $98.6 billion in Medicare savings over the next decade from the drug negotiation program, which translates into savings for patients and taxpayers.
  • GONE: Lower Part D premiums and lower out-of-pocket drug costs for certain Medicare beneficiaries who rely on qualifying drugs.