Pharmaceutical company Merck & Co. filed a lawsuit on Tuesday against the Department of Health and Human Services and the Centers for Medicare and Medicaid Services against the prescription drug negotiations enacted in the Inflation Reduction Act passed last year.
Merck calls the provision of the act “tantamount to extortion” in the lawsuit documents that argue the negotiations represent an unconstitutional attempt to force drug manufacturers to sell their products at government-set prices.
“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 reads.
The provision of the act specifies that the HHS secretary unilaterally require negotiations on prices for qualifying drugs every two years. Included in the program, to start, are 10 drugs selected by the HHS secretary from a list of the top 50 medications approved by the Food and Drug Administration that are prescribed under Medicare Part D, which helps seniors buy self-administered medications. The program will eventually be extended to Medicare Part B, which covers drugs administered in hospitals.
Participation in government-set prices is not voluntary but rather enforced by excise taxes and monetary penalties that can range up to 95% of the drug’s sales revenue.
Some legal analysts contend that Merck’s case is strong and likely to go to the Supreme Court.
“The federal government cannot force pharmaceutical companies to ‘sell’ their patented drugs,” Josh Blackman of South Texas College of Law said. “This new mandate borders on extortion and is likely unconstitutional.”
Joe Grogan of the University of Southern California Schaeffer Center for Health Policy and Economics criticized the act because it “doesn't provide for drug price negotiation as advertised. Instead, it creates a price-fixing regime a Soviet bureaucrat would be proud of. This slow-rolling government takeover of the pharmaceutical industry will strangle innovation, denying essential medicines to patients desperate for newer, more effective treatments.”
Robert Weissman, president of the liberal advocacy group Public Citizen, denounced the lawsuit on Twitter as “a desperate attempt by the industry to beat back popular legislation that would curtail Big Pharma’s ability to price gouge Medicare and secure monopoly profits.”
“Merck is claiming the U.S. constitution requires the U.S. government and people to be suckers. That’s not true,” said Weissman.
Merck executive leadership said in an open letter published Tuesday morning that the law as it stands will be detrimental to the progress of advances in medical technology and treatment.
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“Patients and the public need biopharmaceutical innovation to address global health challenges,” the letter reads. “By changing the incentives and returns for some therapies and technologies over others, the IRA is changing the course of R&D, which in time will leave many patients without treatment options.”
“We need to make sure innovation is supported and encouraged by creating a policy environment conducive to the kind of sustained investment that leads to new treatments and lifesaving and life-improving breakthroughs for patients,” the letter says.