PhRMA Asks Court to Strike Down Medicare Drug-Pricing Rule

The Pharmaceutical Research and Manufacturers of America (PhRMA) has asked a federal court to invalidate the Trump administration's Medicare international drug-pricing rule, arguing that CMS lacks statutory authority to impose foreign-reference pricing on drugs covered under Medicare Part B.

In an 11/4 motion for summary judgment filed in the U.S. District Court for the District of Columbia, PhRMA contends that CMS's Global Benchmark for Efficient Drug Pricing (GLOBE) Model unlawfully replaces Congress's market-based Medicare reimbursement framework with price benchmarks derived from 19 foreign countries.

The industry association argues that CMS improperly relied on Section 1115A of the Social Security Act, which authorizes the Center for Medicare and Medicaid Innovation (CMMI) to test innovative payment and service delivery models. According to PhRMA, that authority does not permit CMS to establish what amounts to a mandatory drug-price control system.

"GLOBE is a poster child for the major questions doctrine," PhRMA argues, citing Supreme Court decisions requiring clear congressional authorization for agency actions of substantial economic and political significance.

The association also contends that GLOBE violates federal restrictions on using certain cost-effectiveness measures in Medicare reimbursement, conflicts with appropriations laws and raises constitutional questions under the Presentment Clause and nondelegation doctrine.

Under the final rule, published October 2, CMS would calculate rebates owed by manufacturers of selected Medicare Part B drugs using international price benchmarks. The model's five-year performance period is scheduled to begin 4/1/2027.

Under an 11/2 scheduling order issued by Judge Royce Lamberth, the government must file its motion to dismiss or for summary judgment by 12/10.