Merck is suing the US government over its plan to negotiate Medicare drug prices, it says

Pharmaceutical maker Merck is suing the US government over its plan to allow Medicare to negotiate prices for a handful of drugs, calling it “extortion”.

The plan, part of 2022 Inflation Reduction Actshould save taxpayers billions of dollars on common drugs that the government pays for. The law requires the Center for Medicare and Medicaid Services to select 10 drugs with no generic or biosimilar equivalents for government price negotiation. (The list will eventually expand to 20 drugs.)

In its lawsuit, filed Tuesday in federal court in the District of Columbia, Merck called the program “a farce” that “involves neither real ‘negotiations’ nor real ‘settlements.'” and Human Services selects the drugs to include and then imposes a discount, threatening drugmakers with a “ruinous daily excise tax” if they reject the terms.

Merck added that it expects its diabetes treatment, Januvia, to be subject to negotiation in the first round, with diabetes drug Janumet and cancer drug Keytruda affected in subsequent years.

The Rahway, New Jersey-based drugmaker is seeking to end the program. “It is tantamount to extortion,” the complaint reads.

Health and Human Services Secretary Xavier Becerra, named as a defendant in the lawsuit, said in a statement the agency plans to “strongly defend” the drug’s price negotiation plan.

“The law is on our side,” he said.


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The lawsuit also names HHS and Chiquita Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services, as defendants.

Merck said the program violates elements of the Constitution, including the Fifth Amendment requirement that the government pay “‘just redress’ if it takes ‘property’ for public use,” according to the complaint.

The drugmaker noted that Congress could have simply allowed HHS to declare a maximum price it would pay for a drug, but that would have allowed the drugmakers to walk away from the talks, leaving millions of Medicare beneficiaries without essential drugs , says the complaint.

Instead, Merck said the government uses the threat of harsh penalties to commandeer drugs and refuses to pay fair value, forcing drugmakers “to smile, play along and pretend it’s all part of a ‘fair’ exchange.” and voluntary”. That violates the First Amendment, the lawsuit says, calling the process “political kabuki theater.”

Patient advocate attacks Merck

David Mitchell, founder of the advocacy group Patients For Affordable Drugs Now, criticized Merck’s lawsuit as an attempt to “unilaterally set prices that are not related to quality at the expense of patients.”

“The reality is that pharmaceutical companies subject to the new Medicare authority – and already negotiating with every other high-income country in the world – will engage in a negotiation process after setting their introductory prices and enjoying nine years or more than monopoly profits,” Mitchell said in a statement.

He added, “Medicare negotiation is a desperately needed and long-awaited rebalancing of our drug pricing system that will help millions of patients get the drugs they need at prices they can afford, while ensuring continued innovation.”

Medicare is the federally funded coverage program primarily for people age 65 and older. Currently, drug companies tell Medicare how much a prescription costs, leaving the federal government and Medicare beneficiaries to pay.

The drug negotiation provisions of the Inflation Reduction Act mark the first time the federal government has bargained directly with drug companies over the price they charge for some of Medicare’s most expensive drugs. Government negotiations with drug makers and price caps on drugs are common in other developed nations.

Republican lawmakers have also criticized President Joe Biden’s administration over the drug pricing plan, saying it could dissuade drugmakers from developing new treatments.

The federal government is expected to release rules for negotiating drug prices soon. In September, it is expected to publish a list of 10 drugs on which it will start price negotiations next year. Negotiated prices won’t catch on until 2026.

With the report of the Associated Press.

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