Bristol Myers Squibb Joins Forces to Challenge Medicare’s Drug Price Negotiation Program

Bristol Myers Squibb (BMS), a leading U.S. pharmaceutical company, has joined the growing list of organizations filing a legal challenge against the Medicare drug price negotiation program established by the Inflation Reduction Act (IRA).

In line with similar complaints filed by Merck & Co. and the Chamber of Commerce, BMS argues that the provision in the IRA granting Medicare the power to negotiate drug prices violates the First and Fifth Amendments.

In a statement, BMS expressed its concern about the IRA’s requirement for pharmaceutical companies to provide innovative medicines to third parties at government-set prices, without considering fair market value. The company asserts that the IRA forces manufacturers to publicly state that the government’s price setting is a fair negotiation, regardless of whether it truly represents fair pricing. BMS argues that this requirement infringes on the First Amendment, which protects citizens from compelled speech.

BMS strongly criticizes the creation of an “unprecedented regime” that allows the Health and Human Services Secretary to dictate the price at which pharmaceutical companies must sell their products.

While drugmakers are not obligated to engage in price negotiations with Medicare, those who choose not to participate face substantial excise tax penalties or the option of withdrawing their drugs from Medicare and Medicaid coverage. However, this would mean sacrificing a highly profitable revenue stream.

Similar to previous legal challenges, BMS seeks to have the drug price negotiation provision in the IRA declared unconstitutional. The company also requests that the federal government be barred from coercing it into signing a manufacturer agreement and that any agreements made under the program be declared invalid.

Despite these lawsuits, the Biden administration dismisses them as typical arguments from the pharmaceutical industry. White House Press Secretary Karine Jean-Pierre stated that claims of hindering innovation due to profit challenges are false and that the American people see through them when Merck announced its lawsuit. An HHS spokesperson confirmed that the government plans to vigorously defend the President’s drug price negotiation law in response to the Chamber of Commerce’s suit.

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