Merck Suing US Govt. Over Medicare Drug Price Negotiations

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Facts

  • Drugmaker Merck & Co. on Tuesday filed a lawsuit in US District Court in Washington, DC claiming the federal government’s plan to allow Medicare to negotiate drug prices violates the company’s First and Fifth Amendment rights.1
  • Merck says the law will force it to negotiate drug prices at below-market rates, violating the Fifth Amendment requirement that the government pays "just compensation" for private property obtained for public use.2
  • The company's second argument claims that its First Amendment right to free speech will be violated by having to sign agreements saying the prices are fair.3
  • The right to negotiate drug prices was included in the Inflation Reduction Act, which became law last year over the objection of pharmaceutical companies. However, negotiated prices won't take effect until 2026.4
  • Merck’s Type 2 diabetes drug Januvia, which it made $2.8B from in 2022, could potentially be on the list of drugs subject to Medicare price negotiations in 2023. It expects its cancer treatment Keytruda and its other diabetes drug Janumet will be subject to the program later.5

Sources: 1Wall Street Journal, 2POLITICO, 3Reuters, 4USA Today, and 5CNBC.

Narratives

  • Democratic narrative, as provided by Axios. Merck is starting a barrage of lawsuits by greedy drug makers attempting to postpone implementation of the IRA drug pricing provisions before they completely cripple enforcement of the excise taxes that make the provisions work. Luckily, the drug companies don’t have a legal leg to stand on because they’re not entitled to sell their drugs to the government at any price they want and are free to not participate in Medicare.
  • Republican narrative, as provided by Daily Caller. Merck and other drug companies need to sue not just to prevent the government from extorting them into selling their drugs for less than market value and bankrupting them, but also to prevent the slow-rolling, socialist-style government takeover of the pharmaceutical industry. When the government takes over, innovation dies and leaves people without important, new treatments and medicines.