Drugmaker Merck has filed a lawsuit against the U.S. government, claiming that its plan to allow Medicare to negotiate drug prices is a form of “extortion.”
The plan, known as the Inflation Reduction Act, aims to save taxpayers billions of dollars by enabling the government to negotiate prices for 10 drugs without generic or biosimilar alternatives (which will eventually expand to 20 drugs). The Center for Medicare and Medicaid Services will be responsible for selecting these drugs.
In its lawsuit, Merck argues that the program is a sham and lacks genuine negotiation. Instead, it accuses the U.S. Department of Health and Human Services of hand-picking the drugs and dictating discounts while threatening drugmakers with daily excise taxes if they refuse.
Merck specifically expects its diabetes treatment, Januvia, to be subject to negotiation in the first round, with Janumet and Keytruda affected in subsequent years. The company seeks to terminate the program, describing it as equivalent to extortion.
Health and Human Services Secretary Xavier Becerra, named as a defendant in the lawsuit, asserts that the agency will vigorously defend the drug price negotiation plan, citing legal support.
The lawsuit also includes HHS and Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services, as defendants. Merck claims that the program violates constitutional elements, such as the Fifth Amendment’s requirement of “just compensation” for public use of property.
Merck argues that Congress could have set a maximum price for drugs instead, but this would have allowed drugmakers to walk away from negotiations, leaving Medicare beneficiaries without essential medications. The company contends that the government resorts to penalties and fails to provide fair compensation, forcing drugmakers to engage in a seemingly “fair” and voluntary exchange, which it considers a violation of the First Amendment.
Patient advocate criticizes Merck
David Mitchell, founder of the advocacy group “Patients For Affordable Drugs Now,” condemns Merck’s lawsuit as an attempt to set prices without considering quality and disregarding patients’ well-being. He emphasizes the need for Medicare negotiation to rebalance the drug price system and ensure access to affordable medications while promoting innovation.
Medicare, a federal coverage program mainly for individuals aged 65 and older, relies on drug companies to determine prescription costs. The Inflation Reduction Act introduces direct negotiations between the government and drugmakers for some of Medicare’s most expensive drugs, following the common practice in other developed nations.
Republican lawmakers have also voiced concerns about President Joe Biden’s drug pricing plan, fearing potential hindrances to the development of new treatments. The federal government is expected to release rules for drug price negotiations soon, with negotiations scheduled to begin in 2022 and prices taking effect in 2026.
With reporting by the Associated Press.
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