Merck sues Biden administration over Medicare drug price negotiations

Global drugmaker Merck connected Tuesday sued the Biden medication implicit Medicare's caller powers to substantially trim cause prices for seniors nether the Inflation Reduction Act, the opening salvo successful the pharmaceutical industry's efforts to weaken the program.

In a scathing ailment filed successful national territory court, Merck excoriated the negotiation process arsenic a "sham" and "tantamount to extortion."

The drugmaker accused the national authorities of employing what the institution described arsenic an unconstitutional strategy to instrumentality backstage spot for nationalist usage without conscionable compensation successful usurpation of the Fifth Amendment.

Merck said the Department of Health and Human Services compels companies to participate into an statement that efficaciously dictates the terms of a cause astatine a 25% to 60% discount nether menace of regular excise taxes that are respective times higher than the medication's regular revenue.

The institution asked the U.S. District Court for the District of Columbia to artifact HHS from compelling the drugmaker to participate into immoderate statement nether the programme to slash prices and void immoderate statement the institution has been forced to participate into.

"Under the IRA, the Government volition requisition Merck's patented pharmaceutical products and transportation them to Medicare beneficiaries done forced sales," the company's ineligible squad wrote successful the complaint.

"Those forced sales—coerced by the menace of draconian penalties that the Government has admitted nary shaper could ever rationally spend to pay—will deprive Merck of possession and rubric to its idiosyncratic property," Merck's attorneys wrote.

Merck besides argued that Medicare's caller powers to negociate prices interruption the company's escaped code rights nether the First Amendment. The drugmaker claimed the Inflation Reduction Act forces companies to enactment successful a "political deception" that presents the programme arsenic a dialog for just prices.

"Conscripting companies to legitimize authorities extortion is the benignant of parroted orthodoxy that the First Amendment's compelled-speech doctrine forbids," Merck's attorneys wrote.

Under the Inflation Reduction, HHS volition prime 10 drugs to beryllium drawn into a archetypal circular of terms negotiations. Those drugs volition beryllium immoderate that Medicare Part D spends the astir wealth connected and that person nary generic competition.

Medicare Part D is the programme that covers the outgo of drugs that seniors typically prime up successful pharmacies.

The Centers for Medicare and Medicaid Services volition people a database of which drugs were selected for the archetypal rhythm of negotiations connected September 1. The companies that marque those drugs look an October deadline to motion agreements to enactment successful those negotiations.

Merck expects its Type 2 diabetes cause Januvia to beryllium taxable to those negotiations this year. The drugmaker booked $2.8 cardinal successful gross from that cause past year, according to fiscal filings.

Merck besides anticipates its blockbuster crab immunotherapy attraction Keytruda and its different diabetes cause Janumet volition beryllium taxable to the programme successful consequent dialog cycles. The drugmaker booked $21 cardinal successful income from Keytruda successful 2022 and $1.7 cardinal successful income from Janumet.

Keytruda represented 35% of Merck's full revenues past year.

CMS volition nonstop its archetypal terms connection for the archetypal circular of terms negotiations connected Feb. 1, 2024, according to a timeline published by HHS. The drugmakers person 30 days to judge that terms oregon taxable a antagonistic offer, according to the department.

The negotiations extremity connected Aug. 1, 2024, and CMS volition people a database of the reduced prices that September, according to the timeline. Those prices spell into effect connected Jan. 1, 2026, according to HHS.

The programme volition grow successful consequent years to Medicare Part B, which mostly covers drugs and treatments that seniors cannot administer astatine location connected their own.