Merck became the first pharmaceutical company to file a lawsuit in connection with the law to reduce inflation in the United States
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Today, June 6, the American pharmaceutical company Merck filed in the District Court of the District of Columbia, a lawsuit against the US Department of Health and several other government agencies. The company believes that a clause in the U.S. Inflation Reduction Act that allows the cost of individual drugs to be negotiated under the National Health Insurance Program (Medicare) violates the U.S. Constitution.
By law, Medicare will negotiate the price of certain drugs with pharmaceutical companies. The first such negotiations should take place in September – they are supposed to discuss the prices of the ten most expensive drugs purchased under the program. The new prices will come into effect in 2026. If companies do not agree to price cuts, US authorities could impose excise taxes on these drugs, up to 95% of their US sales.
The Joe Biden administration hopes the new rules will help cut Medicare drug spending by $25 billion by 2031. Drugs that could be negotiated in the coming years include Merck’s drugs for cancer (Keytruda) and diabetes (Januvia). Their US sales last year were $12.7 billion and $1.2 billion, respectively.
In its lawsuit, Merck says the new rules will allow drug companies to be forced to sell drugs at below market prices. The company believes that these rules force pharmaceutical companies to participate in “political kabuki theater”, pretending that they agree to price cuts voluntarily.
“This is not a negotiation. This is tantamount to extortion,” the lawsuit says. It also argues that the new rules violate the Fifth Amendment to the US Constitution, according to which “private property shall not be taken for public use without fair compensation.” The company is also claiming a violation of the First Amendment, which guarantees freedom of speech, as drug companies will have to sign agreements that the new prices are fair, when in fact they do not think so.
Previously, representatives of the pharmaceutical industry have already stated that the new rules will lead to a loss of profits, which, in turn, will force them to reduce investment in innovative developments. According to Wells Fargo analyst Mohit Bansal, Merck’s lawsuit may be only the first in a series of similar lawsuits from other pharmaceutical companies.
Kommersant wrote in detail about the American law to reduce inflation in the material “Joe Biden didn’t do very well”.
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