Merck sues Biden admin over ‘sham’ drug price negotiation program.

Merck & Co. has filed a lawsuit against the US government, claiming that Medicare’s new program, established under the Inflation Reduction Act (IRA), is a “sham” that violates the First and Fifth Amendments of the US Constitution.

President Joe Biden signed the IRA into law in August of last year, allowing Medicare to directly negotiate pricing for certain expensive drugs.

“It involves neither genuine ‘negotiations’ nor real ‘agreements.’ Rather, once HHS unilaterally selects a drug for inclusion in the program, its manufacturer is compelled to sign an ‘agreement’ promising to sell the drug to Medicare beneficiaries at whatever ‘fair’ price the agency dictates,” according to the court filing.

The lawsuit, filed in the US District Court for the District of Columbia, argues that the new program is a “sham” as it grants the Department of Health and Human Services (HHS) too much power to impose its preferred price.

The IRA mandates the US government to negotiate prices for specific prescription drugs beginning in 2026 as part of the “Drug Price Negotiation Program” for Medicare. Any drugmaker that fails to comply with negotiation requirements is subject to excise taxes and civil penalties.

Through these negotiations, the Biden administration has promised to save $25 billion annually by 2031.

Using these severe penalties, drug companies are being forced into “political Kabuki theater,” Merck argued.

Merck argues that requiring companies to sign voluntary agreements to concede that the prices are fair violates the First Amendment’s protections for free speech. The drug company also argues that the Fifth Amendment obliges the federal government to provide “just compensation” when taking property. Merck contends that Medicare is seeking to obtain prescription drugs without paying fair market value.

This is the first time a drugmaker is trying to challenge the law, and more are anticipated to follow suit.

Merck filed the lawsuit against the HHS and the Centers for Medicare and Medicaid Services (CMS), as well as HHS Secretary Xavier Becerra and CMS Administrator Chiquita Brooks-LaSure.

‘Drugs Are Not Sodas or Jeans’

The lawsuit was expected, given previous signals from the pharmaceutical industry that it intended to sue the federal government for not complying with the Constitution.

According to Kir