Merck sues feds to stop Medicare drug price negotiations

Merck said it filed a lawsuit against the federal government seeking an injunction of the drug price negotiation program in the Inflation Reduction Act, arguing it violates the First and Fifth Amendments, Reuters reported June 6.

The law in question is part of the Biden administration's drug pricing reform, which aims to save $25 billion by 2031 through price negotiations for Medicare. The first drug price reduction process is due to begin in September, when CMS identifies its 10 most costly drugs. Following negotiations, new prices will go into effect in 2026. The pharmaceutical industry argues the Inflation Reduction Act, signed into law last year, will result in profit losses that will slow development of groundbreaking treatment.

The lawsuit filed by Merck, which names CMS, HHS and the HHS secretary and CMS administrator, was filed in the U.S. District Court of the District of Columbia. 

Merck's lawsuit argues that under the law, drugmakers would be forced to negotiate prices for drugs in the government's Medicare healthcare insurance program at below market rates, which is in violation of the Fifth Amendment. The Fifth Amendment requires the government to pay just compensation for private property taken for public use. 

"The IRA uses severe penalties to requisition medicines while refusing to pay their fair value — and then coerces manufacturers to smile, play along and pretend it is all part of a 'fair' and voluntary exchange," Merck told Reuters. "This is political Kabuki theater."

Merck also argues the law will force companies to sign agreements conceding the prices are fair, which it says violates the First Amendment.

Merck told Reuters it plans to litigate the matter to the Supreme Court if necessary.

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