Merck has filed a lawsuit against the Biden administration regarding Medicare’s increased authority to lower drug prices for senior citizens under the Inflation Reduction Act. This is the pharmaceutical industry’s initial move to diminish the program.
Merck filed a complaint in federal court in Washington DC, criticizing the negotiation process as a “sham” and “tantamount to extortion,” according to The New York Times.
The drugmaker alleged that the federal government used an unconstitutional method to acquire private property for public use without proper compensation, which violated the Fifth Amendment.
The Inflation Reduction Act, passed into law in the previous year, granted more authority to Medicare in its efforts to address the growing issue of inflated drug prices. The passage of this act was a significant achievement for President Joe Biden and the Democratic Party in Congress.
The pharmaceutical industry has voiced opposition towards the law, stating that it may hinder the development of new drugs.
Merck stated that the Department of Health and Human Services requires companies to agree to a pricing scheme that can result in a 25% to 60% discount on a drug. Failure to comply may result in daily excise taxes that exceed the medication’s daily revenue.
Merck has filed a request with a judge to prevent HHS from enforcing participation in the program.
“Under the IRA, the Government will requisition Merck’s patented pharmaceutical products and transfer them to Medicare beneficiaries through forced sales,” the company’s legal team wrote in the complaint.
“Those forced sales—coerced by the threat of draconian penalties that the Government has admitted no manufacturer could ever rationally afford to pay—will deprive Merck of possession and title to its personal property,” Merck’s attorneys wrote.
Merck has filed a lawsuit claiming that Medicare’s ability to negotiate prices violates the company’s First Amendment rights to free speech. The company argues that the Inflation Reduction Act requires their participation in a program that presents itself as a negotiation for fair prices, but is actually a “political deception.”