The main US pharmaceutical lobby group has taken the Trump administration to court in a bid to strike down a rule that would use prices paid in 19 other wealthy countries to calculate rebates for certain Medicare Part B drugs, arguing the move is unlawful.

The Pharmaceutical Research and Manufacturers of America (PhRMA) filed the challenge on Wednesday in the US District Court for the District of Columbia.

It names Health Secretary Robert F Kennedy Jr, the Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS), CMS administrator Dr Mehmet Oz and Abe Sutton, director of the CMS Innovation Center.

The rule, known as GLOBE, uses a 'most favoured nation' benchmark to calculate rebates for certain drugs covered by Medicare Part B. That part of the programme covers medicines given by doctors or in hospitals, such as treatments for cancer and autoimmune disorders. The final rule was published on 30 September and is due to take effect on 1 January.

Drug Lobby Says Medicare Rule Overreaches

PhRMA argues that CMS has stretched the authority Congress gave it to test new payment models and is effectively rewriting Medicare's pricing structure without legislative approval.

Jim Stansel, PhRMA's general counsel, said Congress had given the agency 'a little bit of authority to test models'. He added: 'Instead, CMS is doing exactly what Congress has declined to do multiple times over the last several years, and that's to replace the pricing structure in Medicare with a most-favored-nation structure.'

HHS did not immediately comment on the lawsuit. In the final rule, however, it said it was acting within a statutory framework 'that Congress designed precisely for this type of model test'.

Mr Stansel said the case mattered despite the rule's narrow reach, because GLOBE could outlast the voluntary deals drugmakers have struck and be used by future administrations. Rachel Turow, an attorney at the law firm Skadden who is not involved in the case, said it could be seen as an attempt to head off future price controls using similar mechanisms.

PhRMA spokesman Chanse Jones has said the policy exceeds the agency's authority and does nothing to cut patients' out-of-pocket costs.

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Limited Scope, Lower-Than-Expected Savings

The final rule covers far fewer drugs than the administration first proposed in December. Rare disease medicines have been exempted following public comments, according to a Federal Register document.

CMS will exclude manufacturers that have signed separate pricing agreements with the White House. More than 20 companies have done so, including Pfizer, Eli Lilly and Novo Nordisk. A footnote in the rule says as few as four manufacturers could ultimately be covered. It does not name them.

HHS now estimates GLOBE will cut Medicare Part B spending by about $440m (£330m) over the seven-year payment period. The proposed rule had projected about $11.9bn. HHS did not respond to questions about the reduction.

Rachel Sachs, a professor of law at Washington University in St Louis, said the set of drugs and the programme's potential impact had 'shrunk dramatically'.

The scheme is a trial run by the CMS Innovation Center. If it saves money without harming quality of care, it could be expanded nationwide.

Dr Oz has said Medicare Part B patients and taxpayers have paid significantly more for prescription medicines than people in comparable countries, and that CMS is piloting a new approach to lower costs.

This is not the first legal fight over such a policy. In 2020, PhRMA and other groups successfully challenged an earlier most-favoured-nation pricing rule from the first Trump administration. Courts blocked its implementation, citing procedural issues including the decision to issue it without the required public comment process.

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