Pharmaceutical company Merck sued the government on Tuesday over a federal law that gives Medicare, for the first time, powers to: Negotiate prices directly with pharmaceutical companies.
Merck’s lawsuit, filed in federal court in Washington, is the pharmaceutical industry’s most significant move yet against drastic changes in healthcare policy that will take effect from 2026. Democrats pushed through the Medicare bargaining program last summer. It is a provision of the Inflation Control Act and is framed as a means of reducing drug prices.
Only some drugs are subject to negotiations with Medicare, and only if they have been on the market for years without competition. But Merck, which made $14.5 billion in profit last year, said in a statement Tuesday that the law would curb the ability of itself and its peers to make risky investments in new treatments.
Other pharmaceutical companies have suggested they may choose to cut certain drug development programs due to expected revenue declines.some people have already said that re-evaluate their Research plan.
Merck said it is seeking a court order or another legal remedy that could exempt it from participating in the negotiation program.
U.S. Health and Human Services Secretary Xavier Becerra said in a statement that the Biden administration “strongly defends” the legislation. “The law is on our side,” he said.
In a complaint filed Tuesday, attorneys at law firm Jones Day argue that the Medicare bargaining program is unconstitutional. They argued that the program would force Merck to offer products at government-set prices, and that the program, which barred the government from taking private property for public use without just compensation, was a 5th Amendment to the Constitution. It alleges that it violates the terms of the article. They also allege that the program violates Merck’s free speech rights by forcing Merck to sign agreements it disagrees with at the end of negotiations.
But several experts who study the industry said the constitutionality argument was weak and would face a tough battle in court. “What Merck claims to be ‘coercion’ is actually the establishment of a more liberal and rational market,” said Dr. Amet Sarpatwari, a pharmaceutical policy expert at Harvard Medical School. , said it would address a significant underlying cause of high drug prices.
Experts noted that: negotiation process It gives drug companies the freedom to reject Medicare’s final offer and, if unsatisfied, withdraw without agreement, subject to taxation.
In September, the government will announce the first 10 drugs to be negotiated in 2026. Merck’s widely used diabetes treatment Januvia likely to be on that list.
The program could also affect Merck’s long-term plans for its blockbuster cancer drug Keytruda, Golden Goose. It could be one of the first products to be targeted when talks begin on point-of-care drugs in 2028.
The current version of Keytruda, which is administered as an IV, will face its first competition in the same year, so its sales are expected to decline whether it is included in the program or not. But Merck was developing a new formulation of Keytruda that could be administered subcutaneously more easily and expected to bring in significant revenue. Based on government plans, this could also be subject to negotiations.
Sheryl Gay Stolberg contributed to the report.