Teva Hits Biden With New Challenge to Medicare Drug Price Talks

Teva Pharmaceuticals USA Inc. is taking the Biden administration to court over its drug price negotiation program, days before the US government is set to release the next list of drugs selected for price cuts.

The company filed a lawsuit Wednesday in the US District Court for the District of Columbia challenging certain aspects of the Inflation Reduction Act’s Medicare Drug Price Negotiation Program, as well as the guidance issued by the Centers for Medicare & Medicaid Services implementing the law.

The program allows the US government to set the prices on some of the most widely used and expensive drugs that are covered under Medicare. The agency is due to release the second list of drugs selected for negotiations in February, but the Biden administration could release the list before President-elect Donald Trump takes office Jan. 20.

The lawsuit appears to be a proactive move from Teva, who says it expects its drugs Austedo and Austedo XR, used to treat movement disorders, to be eligible for price cuts.

“This challenge to CMS’s implementation of the IRA’s drug-pricing provisions reflects Teva’s unique position in the pharmaceutical ecosystem as a developer of innovative medicines as well as high-quality generic drugs and biosimilars,” the manufacturer wrote in the complaint.

“For this system to work, though, generics and biosimilars must be able to compete on price by charging substantially less than their branded counterparts, capturing market share in the process.”

Teva claims the agency’s implementation guidance rewrote two critical limitations imposed by Congress in the Inflation Reduction Act.

“First, the IRA makes drugs eligible for price controls only after they have been marketed for a set number of years. Second, the IRA exempts drugs from price controls when a non-branded competitor—such as a generic or biosimilar—emerges,” Teva wrote. “CMS rendered both of those Congressionally imposed limitations illusory by fabricating a new definition of a statutory term and by replacing a statutory test with one of CMS’s own making.”

Teva argues the CMS created a “made-up definition” for what constitutes as a “Qualifying Single Source Drug.” The term under the law describes what is eligible to be selected for the program.

“Under the statute, each eligible drug corresponds to a particular FDA application to approve that drug,” Teva wrote. “Under CMS’s made-up definition, the agency can decide that two or more drugs approved under distinct FDA applications held by the same entity should be treated as one Qualifying Single Source Drug because they have the same active moiety—that is, the same active molecule.”

Teva in its complaint said Austedo—which is indicated for two movement disorders, Tardive Dyskinesia and Huntington’s Disease chorea—is “reasonably expected” to be selected for inclusion in 2025. It’s drug Austedo XR is the extended-release formulation of Austedo.

“Under CMS’s definition of a Qualifying Single Source Drug, AUSTEDO XR is eligible for selection, too, even though it has been approved for well under seven years, because it shares an active moiety with AUSTEDO and Teva holds both NDAs,” Teva added.

If both drugs are selected, “Teva’s revenue for those drugs will be lower than would be the case if no MFP were applied to those products.”

The lawsuit adds to the ongoing legal challenges from manufacturers from the first drug price negotiation cycle.

Manufacturers so far have been unsuccessful in litigation. However, a drug industry group secured a partial win when a federal court in Texas agreed they have a case against the government’s plan.

“This case, however, is different from the others,” the company wrote. “This case is about the unlawful way in which CMS implements the entire IRA system as well as the harms visited on non-branded drugs and biologics, as Teva also knows first-hand.”

The drugmaker asks the court to declare the government’s definition of a “Qualifying Single Source Drug” and “bona fide” marketing as unlawful and arbitrary and capricious; declare that agency guidance violates the Fifth Amendment’s due process clause; and issue injunctive relief barring the CMS from applying the drug pricing provisions to Teva or to the manufacturers of branded drugs or biologics with which Teva competes or will compete in the future.

Hogan Lovells US LLP represents Teva.

The case is Teva Pharmaceuticals USA Inc. v. Becerra, D.D.C., No. 1:25-cv-00113, complaint filed 1/15/24.