The lawsuit from the U.S. Chamber of Commerce, one of the most powerful business lobbying groups, is the second one this week to challenge Medicare's drug price negotiation power. Pharmaceutical giant Merck filed its own federal lawsuit on Tuesday.
"Government price controls harm patients, limit access to medicine, and stifle American innovation. Moreover, the new provisions in the Inflation Reduction Act (IRA) violate fundamental protections for free enterprise enshrined in our Constitution, which would have far-reaching implications in the future," the Chamber said in a statement.
More legal challenges are likely, including from the pharmaceutical industry's trade groups. Drug companies suffered a rare loss in Congress last summer when the Inflation Reduction Act passed despite extensive lobbying against it.
While relatively modest, the negotiation provision still represents a major victory for drug pricing advocates. The legislation allows negotiations for up to 10 of the highest cost drugs beginning in 2026, with more allowed in later years.
Another provision would cap out-of-pocket costs for Medicare's prescription drug benefit at $2,000, saving seniors thousands of dollars. The legislation also aims to prevent companies from massive pricing hikes by imposing rebates on manufacturers that increase prices faster than inflation.
Similar to Merck's argument, the Chamber's lawsuit alleged that the provision amounts to illegal price setting by forcing companies to accept the Medicare rate.
The suit also accuses the law of consolidating "unfettered and unchecked power" to the Department of Health and Human Services (HHS).
HHS didn't immediately respond to a request for comment, but the Biden administration earlier this week said it expected "Big Pharma" to try to fight back and was confident it'd prevail in the Merck lawsuit.
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