US Fifth Circuit Faces Consequential Constitutional Challenge to Inflation Reduction Act's Medicare Drug Pricing Regime

The US Court of Appeals for the Fifth Circuit is being asked to rule on what legal commentators are describing as one of the most consequential constitutional challenges to come before that court in years: a challenge by the National Infusion Center Association to the Inflation Reduction Act's Medicare drug price negotiation programme. The case — *National Infusion Center Association v. Kennedy* — centres on whether the programme's structure constitutes genuine negotiation or, in practice, a government-mandated price control. The mechanics are stark: manufacturers that decline to participate face an excise tax starting at approximately 186% of a drug's total US revenue, escalating to as high as 1,900%. Those that sign the agreement but refuse to honour the dictated price face civil monetary penalties equal to ten times the difference between the price charged and the government's determined "maximum fair price." The only alternative is to withdraw every drug a manufacturer makes from Medicare and Medicaid — effectively foreclosing access to roughly half the US prescription drug market. The constitutional arguments span three distinct grounds: a nondelegation challenge (that Congress granted the Department of Health and Human Services sweeping price-control authority without meaningful limits); an Eighth Amendment excessive fines argument (that the penalty structure is so severe it constitutes punishment for exercising a legal right); and procedural concerns (including exemption from notice-and-comment rulemaking and insulation from judicial review). The US Supreme Court declined to grant certiorari in parallel circuit challenges in May, with the Second and Third Circuits having upheld the programme. A Fifth Circuit ruling in the opposite direction would create a circuit split — the condition most likely to trigger Supreme Court review.

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