K-STREET, 10,000 FEET: How courts could undermine Biden's Inflation Reduction Act

THE LOWDOWN:

• Oral arguments just started in Dayton Area Chamber of Commerce v. Robert F. Kennedy Jr. case in the Sixth Circuit. If the plaintiffs are successful, they could successfully challenge what they decry as “drug price controls” in President Joe Biden’s signature Inflation Reduction Act (IRA).

• Jeff Stier, an attorney and senior fellow for Consumer Choice, explained the stakes of the case, saying the “federal government is trying to torture the standard set by the Supreme Court as to whether the chamber satisfies the second prong of the standing test for an association, which requires the case be germane to its broader mission.”

• Conservatives in both Ohio and in the Trump universe are sounding the alarm about these IRA provisions. “Negotiations have nothing to do with the program spelled out in the IRA,” Ken Blackwell, a former Mayor of Cincinnati, said.

• Nationally, conservatives like OH Skinner, another former state Solicitor General who also serves as the executive director of the Alliance for Consumers, noted that “the Biden administration went against [a] foundational rule of life when they tried to wipe countless household products off store shelves.”

President Joe Biden’s signature legislative accomplishment is in serious jeopardy thanks to a little-known case making its way through the Appeals Court system.

Oral arguments just started in Dayton Area Chamber of Commerce v. Robert F. Kennedy Jr. case in the Sixth Circuit. If the plaintiffs are successful, they could successfully challenge what they decry as “drug price controls” in Biden’s Inflation Reduction Act (IRA).

The case centers around a challenge to price control measures within the IRA, which proponents view as a way to authorize Medicare to negotiate some prescription drug prices. However, opponents argue these are unconstitutional price controls.

Jeff Stier, an attorney and senior fellow for Consumer Choice, explained the stakes of the case, saying the “federal government is trying to torture the standard set by the Supreme Court as to whether the chamber satisfies the second prong of the standing test for an association, which requires the case be germane to its broader mission.”

“If opposing unconstitutional price controls, which are already directly harming a wide range of the chamber’s members isn’t germane to its mission, nothing ever will be,” Stier said.

At issue, according to Ben Flowers, a former Solicitor General of Ohio, is a standing issue, “not the merits.” But, Flowers said, “the merits issues deserve more attention than they’ve received.”

The IRA, Flowers said, “imposes price controls. It does so by allowing the HHS Secretary to select drugs whose manufacturers can be forced to engage in a negotiation program.”

“In negotiations, HHS can demand that the drugs be sold to Medicare participants at prices far below market value,” Flowers continued. “Put into constitutional terms, the Inflation Reduction Act lets the feds take the companies’ property without providing just compensation, violating the 5th Amendment.”

Flowers’s arguments were echoed by legal experts like Dr. Roger Klein, a Faculty Fellow at the Sandra Day O'Connor College of Law at Arizona State University.

“There are program restrictions that do not permit ending participation at will,” Klein said. “Instead, drugmakers that don’t accept Medicare dictated prices could face ruinous financial penalties — euphemistically labeled an excise tax — starting at 186 percent and rising to as high as 1900 percent of a drug’s total daily revenues from all sources, not just Medicare.

“Thus, pharmaceutical companies are given a Hobson’s choice: participate under the government’s arbitrary and detrimental terms or cease to operate,” Klein added.

Conservatives in both Ohio and in the Trump universe are sounding the alarm about these IRA provisions. “Negotiations have nothing to do with the program spelled out in the IRA,” Ken Blackwell, a former Mayor of Cincinnati, said.

“The truth is, the drug ‘negotiation’ program is simply a price-fixing racket created by Democrats in Congress to empower [HHS] to dictate drug prices, independent of any free market considerations,” Blackwell said.

Nationally, conservatives like OH Skinner, another former state Solicitor General who also serves as the executive director of the Alliance for Consumers, noted that “the Biden administration went against [a] foundational rule of life when they tried to wipe countless household products off store shelves.”

“The best possible thing for consumers is more choice, more options, and the chance to buy what they want,” Skinner said.

“Thankfully, President Trump is reversing that. But there is another aspect of Biden's campaign against consumers that is still alive: price controls in healthcare. One of the fastest ways to harm consumers in the healthcare industry is to establish price controls that will stifle innovation and create shortages of products and services. If you want to see how bad price controls are for consumers, look no further than Europe and Canada where government-imposed price controls have led to drugs and other important treatments being rationed and every day consumers waiting months for simple procedures like an MRI.”

That warning was echoed by Trump’s former Director of the White House’s Domestic Policy Council, Joe Grogan. “The IRA hasn’t just increased the burden on US taxpayers, it’s diminishing choice and access to drugs and drug coverage,” he said.

Should this case in Ohio succeed, the warnings from local and national conservatives are far less likely to come to pass.