Inflation Reduction Act foes race to repeal climate, drug pricing programs

When President Biden signed his sprawling economic spending package into law last August, he heralded its massive investments in health care and climate change as an achievement that defied the odds.

“The American people won, and the special interests lost,” Biden proclaimed at the time.

Nearly a year later, though, his pronouncement appears in jeopardy: A growing roster of corporate and political foes has started to lay siege to the law known as the Inflation Reduction Act, hoping to erode some of its key provisions before they can take effect.

The latest broadside arrived Friday, when the pharmaceutical giant Bristol Myers Squibb—a maker of the popular blood-thinner Eliquis—sued the Biden administration over its forthcoming program to lower prescription drug prices for seniors. The case marked the third such legal challenge against the U.S. government this month, raising the prospect that older Americans may never see cheaper pharmacy bills.

On Capitol Hill, meanwhile, House Republicans over the past week unveiled a battery of measures that would fund the government—and stave off a federal shutdown—on the condition that Congress revokes billions of dollars in funding for other Inflation Reduction Act initiatives. Separately, GOP leaders also took the first step to terminate tax credits that would expand clean energy and promote electric vehicles, potentially undermining Biden’s plans to reduce carbon emissions.

Some of the legislative efforts face tough political hurdles because Democrats control the Senate and Biden could veto any repeal. But the intensifying opposition underscores the fragility of the president’s agenda under a divided government—and the stakes for Biden’s signature achievement entering the next election.

“They came right out of the gate and went to work,” said Sen. Ron Wyden (D-Ore.), the leader of the tax-focused Senate Finance Committee, referring to the law’s opponents. “Everybody’s got a constitutional right to be foolish, but some of this is just economic self-sabotage.”

But Wyden said Democrats would be vindicated in their efforts to defend their accomplishment: “People are already getting relief, they’re getting direct relief in their pockets.”

For Democrats, the adoption of the Inflation Reduction Act last year secured the final component of Biden’s vast economic agenda. It clinched the largest single burst of climate funding in U.S. history, and it introduced a bevy of long-sought health-care affordability programs targeted at seniors, including a cap on insulin prices for Medicare beneficiaries.

Yet the law stopped short of Biden’s original, roughly $2 trillion re-envisioning of the role of government in Americans’ lives, after Democrats failed to overcome their own internal fissures—and unanimous Republican objections. Lawmakers also faced an onslaught of lobbying: The nation’s largest companies and lobbying groups spent a combined $2.3 billion in 2022 to shape or scuttle key components of the emerging law, according to a review of federal ethics disclosures and data compiled by the money-in-politics watchdog OpenSecrets.

Among the fiercest critics was the pharmaceutical industry, which spent more than $375 million to lobby over that period, the records show. Many tried and failed to block Congress from granting the government new powers to negotiate the price of selected prescription drugs under Medicare.

The work to implement that program is underway: The Biden administration is supposed to identify the first 10 drugs it is targeting for negotiation by September, continue the formal process into 2024 and see the prices implemented in 2026, with more drugs to follow in future years. Drug manufacturers that refuse to comply would face steep financial penalties.

Already, though, pharmaceutical giants have filed an early blitz of legal challenges to that plan.

In its lawsuit Friday, Bristol Myers Squibb argued the negotiation process violates the company’s constitutional rights, particularly by forcing it to sell its medicines at steep discounts. The company earned $46.2 billion in revenue last year, including about $11 billion from Eliquis, one of the drugs that could be targeted for Medicare negotiation.

In a separate statement, Bristol Myers Squibb said the Inflation Reduction Act had “changed the way we look at our development programs,” particularly for cancer drugs. It added that any haggling with the government would harm “millions of patients who are counting on the pharmaceutical industry to develop new treatments.”

The lawsuit echoes the arguments raised by another pharmaceutical giant, Merck, which sued the Biden administration earlier this month in a bid to shield its lucrative diabetes and cancer drugs from potential price cuts. The industry’s top lobbyists also have joined the fight: The U.S. Chamber of Commerce— whose dues-paying members include drugmakers AbbVie and Eli Lilly—aligned with local business groups in a June 9 lawsuit to try to block Medicare from bringing the program online.

Some top executives have signaled they expect additional legal challenges on the near horizon. Asked about its plans at a Bloomberg investor conference earlier this month, for example, the chief executive of the drugmaker Biogen responded: “I think we’ll look at it.”

“In Merck’s lawsuit, they talk about an ‘extortion,’ and I think that is accurate,” Chris Viehbacher said earlier in the conversation. “I’m personally not surprised by the lawsuit. I wouldn’t be surprised if you see more.”

The early volleys against the law seemed reminiscent of the reception that greeted Biden’s Democratic predecessor more than a decade earlier, when President Barack Obama had to fend off a dizzying array of insurance industry lawsuits and GOP-led efforts to repeal the Affordable Care Act. The core tenets of the law emerged mostly unscathed, but only after years of expensive, complicated legal and political wrangling—which may foreshadow the new fight over drug pricing awaiting the White House.

“When you’re taking on the pharmaceutical industry, you’re taking on one of the most powerful institutions in the country,” said Sen. Bernie Sanders (I-Vt.), one of the architects of the drug pricing program, who leads the Senate Health, Education, Labor and Pensions Committee. “They are a very, very powerful entity.”

On Capitol Hill, GOP lawmakers at times have sided with the industry, even introducing legislation that would cancel Medicare’s new powers before they take effect. More recently, though, Republicans have labored to neuter the Inflation Reduction Act primarily by revoking its funding.

In two measures to fund the government released Wednesday, GOP lawmakers led by Rep. Kay Granger (R-Tex.), the chair of the House Appropriations Committee, proposed to eliminate about $13 billion meant to boost rural energy, help Americans afford energy-efficient appliances and implement new green building standards.

“It is finally time to be responsible stewards of taxpayer dollars by rescinding these new government giveaways,” said Rep. Andy Harris (R-Md.), a member of the far-right House Freedom Caucus, who leads a key congressional subcommittee overseeing some of the funds.

Other Republicans have tried to narrow or eliminate a bevy of tax credits designed to spur the adoption of cleaner energy, including solar and wind power, even as their congressional districts benefit from an influx of new investment.

Republicans on the House Ways and Means Committee recently advanced a trio of bills cutting taxes for businesses—paid for by repealing key portions of the Inflation Reduction Act meant to boost clean energy and clean electricity development. GOP lawmakers would also whittle down a tax program meant to help Americans purchase new electric vehicles, while eliminating tax credits for used EVs.

Rep. Jason T. Smith (R-Mo.), the chairman of the panel, described the provisions in a statement as “hundreds of billions of dollars in green special interest tax breaks to the wealthy and well connected.” As he finalized the legislation, he pledged the party would repeal “the worst of these handouts.”

The bill marked the second time in two months that Republicans had embraced such a repeal. They initially tried to revoke much of the 2022 law as part of their April bill to cut spending and raise the debt ceiling. Ultimately, Republicans only secured one of their proposed cuts—a rescission of billions of dollars meant to help the IRS pursue unpaid taxes—as part of the debt ceiling deal struck this month between Biden and House Speaker Kevin McCarthy (R-Calif.).

“The Republicans are putting themselves in political jeopardy by trying to attack the IRA, the provisions of which are incredibly popular,” said Ben LaBolt, the communications director at the White House.

The flurry of activity on Capitol Hill came as the Biden administration finalized rules that would allow local governments and nonprofits to take advantage of new clean energy tax breaks. John D. Podesta, the senior adviser to the president for clean energy, predicted to reporters that the policies could open the door for local officials to electrify their own vehicle fleets, build local rooftop solar networks and deploy other projects that reduce emissions.

“We’re already seeing a massive response from the private sector,” he said.

Some of those investments have greatly benefited Republican-held congressional districts. To highlight the stakes, the left-leaning Center for American Progress Action Fund found in an analysis released Friday that roughly 100,000 jobs in these communities could be affected if lawmakers wiped out climate provisions in the Inflation Reduction Act.

The figure represents a tally of announcements from companies that make electric vehicle batteries, solar panels and fuel cells, some of which were made before and after the passage of the law, as firms sensed a business opportunity.

In a fierce legislative debate, some Democrats echoed that view. Rep. Richard E. Neal (D-Mass.), the top party lawmaker on the Ways and Means Committee, on Tuesday criticized the GOP approach as a “scam” before touting the Inflation Reduction Act as “wildly popular with the American people, including the Republican base.”