Merck & Co (MRK.N) sued the U.S. government on Tuesday, seeking to halt the Medicare drug price negotiation program contained in the Inflation Reduction Act (IRA), which it argues violates the Fifth and First Amendments to the U.S. Constitution.
This is the first attempt by a drugmaker to challenge the law, which the pharmaceutical industry says will result in a loss of profits that will force them to pull back on developing groundbreaking new treatments.
Americans pay more for prescription medicines than any other country. The Biden administration’s drug pricing reform aims to save $25 billion annually by 2031 through price negotiations for drugs paid for by Medicare, the government health plan for those age 65 and over.
The lawsuit, filed in U.S. District Court for the District of Columbia, argues that under the law, drugmakers would be forced to negotiate prices for drugs at below market rates.
Merck asserts this violates the part of the Fifth Amendment that requires the government to pay just compensation for private property taken for public use.
After the government released its roadmap for price negotiations in March, industry lobbyists and lawyers told Reuters that drugmakers were likely to file lawsuits arguing that the government is not complying with the U.S. Constitution.
Merck called the talks with the Centers for Medicare and Medicaid Services (CMS) coercive and said it forces drugmakers to participate in “political Kabuki theater” by pretending negotiations are voluntary.
“This is not ‘negotiation.’ It is tantamount to extortion,” Merck said in the suit.
The drugmaker also argues that the law will force companies to sign agreements conceding that the prices are fair, which it claims is a violation of the First Amendment’s protections of free speech.
