Teva Challenges Drug Price Law's Impact On Innovation, Generics

Teva Pharmaceuticals Industries Ltd TEVA has filed a lawsuit contesting the Inflation Reduction Act of 2022, targeting its drug-pricing provisions and the Centers for Medicare & Medicaid Services’ implementation of the program.

The company argues that the law undermines pharmaceutical innovation and the delicate balance between affordability and competition in the U.S. healthcare system.

Teva’s complaint highlights its dual role as a developer of therapies and provider of lower-cost generics and biosimilars.

The company contends that the IRA's Drug Price Negotiation Program (DPNP) disrupts free-market competition by enabling CMS to impose price controls without a statutory basis, a move Teva deems unconstitutional.

Also Read: Teva Pharmaceutical Releases Impressive Phase 2 Candidate Data For Gastro-Related Diseases

According to the lawsuit, the DPNP, framed as a negotiation process, functions more like a price mandate, leaving manufacturers with no viable alternatives but to comply.

Key to Teva’s challenge is CMS’s interpretation of what constitutes a “Qualifying Single Source Drug,” which determines when a drug becomes subject to price controls.

Teva claims CMS expanded the definition beyond congressional intent by including drugs with the same active molecule but approved under different FDA applications. This redefinition accelerates price control timelines, diminishing the competitive window for generics and biosimilars to gain market traction.

Additionally, Teva criticizes CMS’s “bona fide marketing” standard, which replaces Congress’s clear criteria for determining when a generic or biosimilar competitor ends price control eligibility. The standard introduces subjective and unpredictable assessments, prolonging price control periods for branded drugs and impairing generics' ability to compete on cost.

Teva’s lawsuit seeks injunctive and declaratory relief to protect its operations and the broader public health ecosystem, emphasizing the need to balance innovation incentives with cost-effective healthcare solutions.

Price Action: TEVA is up 0.85% at $21.86 at last check Friday.

Read Next:

• FDA Approves AstraZeneca’s Calquence Combo Therapy For Untreated Mantle Cell Lymphoma

Image created using artificial intelligence via Midjourney.