In an effort to strengthen the pharmaceutical industry’s attack on a regulation that drugmakers fear would hinder their capacity to create novel medicines, Merck & Co. has filed a lawsuit against the U.S. government over Medicare’s recently-given right to negotiate the cost of some top-selling drugs.
Merck’s Grievances in the Medicare Lawsuit:
- Merck urged a federal court to deem the new pricing powers unlawful and prevent the government from executing their terms.
- These requirements were outlined in the Inflation Reduction Act that was passed the previous year.
- The proposed scheme that Medicare is going to use in order to determine some drug costs is a “sham”.
- The scheme also violates both the First and Fifth Amendments to the Constitution.
In the lawsuit, the attorneys for Merck claimed that “this is not ‘negotiation.'” It is the same as extortion, according to the company, which went on to claim that under U.S. law, the federal government is required to provide “just compensation” if it acquires property for public use. This is how the business defined the application of penalties to get pharmaceutical companies to agree to decrease pricing.
Furthermore, Merck asserted that the law’s demand that manufacturers sign contracts consenting to a drug’s ultimate “fair price” violated the freedom of speech philosophy of the First Amendment.
Merck stated that the pharmaceutical sector has invested more than one trillion dollars over the course of the last three decades into the research and development of new pharmaceuticals and that the IRA places this investment in jeopardy.
The suit was filed against the U.S. Department of Health and Human Services as well as the Centers for Medicare and Medicaid Services, both of which are in the process of formulating guidelines for the program and are planning to identify the first 10 pharmaceuticals up for negotiation by the beginning of September. The IRA gives the CMS the authority to negotiate pricing for as many as 140 single-source medications that Medicare will cover by 2033.
The enactment of the legislation was a huge setback for the pharmaceutical industry in the country, which has pushed and cautioned against it several times since its passage, claiming that it will hinder pharmaceutical research and development. It was inevitable that there would be a legal challenge, and Merck’s case is the first attempt by the pharmaceutical sector to overturn the law through the judicial system.
Controlling the prices of pharmaceuticals has been a focus for Democrats for several decades and has also been a recent priority for some Republicans under the administration of former President Donald Trump. Both drug manufacturers and pharmacy benefit managers have been the target of criticism this year, but this subject has stood out as one of the few areas that have received support from both the Democratic Party and the Republican Party.
In the complaint it filed, Merck did not pull any punches, using extremely harsh language to describe the IRA. “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. This is political Kabuki theater,” the lawsuit said.
