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Merck sues government over drug price negotiation

Drugmaker seeks injunction against parts of last year's reconciliation law

Prescription drugs are pictured in Washington, D.C., on Dec. 26, 2022.
Prescription drugs are pictured in Washington, D.C., on Dec. 26, 2022. (Tom Williams/CQ Roll Call file photo)

Drugmaker Merck & Co. Inc. sued the federal government Tuesday, seeking an injunction against parts of last year’s reconciliation law that allow the Health and Human Services Department to negotiate for lower prices on drugs.

The lawsuit, filed in the U.S. District Court for the District of Columbia, argues that the negotiation program is “extortion” and violates the Fifth Amendment by not paying the company “just compensation” for its products.

“By coercing Merck to provide its drug products at government-set prices, the Program takes property for public use without just compensation in violation of the Fifth Amendment,” Robert Josephson, Merck’s executive director of global media relations, said in a statement.

The reconciliation law passed by congressional Democrats in 2022 allows Medicare to negotiate for lower prices for a certain subset of drugs.

As implemented by the federal government, the Centers for Medicare and Medicaid Services develops an initial offer and drugmakers can submit a counteroffer. That process has not yet started.

But Merck argues that drugmakers are coerced into accepting the offer or must pay “draconian” daily penalties.

The law “uses severe penalties to requisition medicines while refusing to pay their fair value — and then coerces manufacturers to smile, play along, and pretend it is all part of a ‘fair’ and voluntary exchange. This is political Kabuki theater,” the complaint states.

Merck said it “intends to litigate this matter all the way to the U.S. Supreme Court if necessary.”

HHS did not immediately respond to a request for comment.

But Democratic lawmakers lambasted the lawsuit, with House Energy and Commerce ranking member Frank Pallone Jr., D-N.J., calling it “outrageous.”

“Empowering Medicare to negotiate fair prescription drug prices for seniors is not only plainly constitutional, but it’s also necessary if life-saving drugs are to continue to be available to all Americans,” he said, adding, “The only rights that are being violated here are those of the American people who have been getting ripped off by Big Pharma companies like Merck for years.”

Sen. Patty Murray, D-Wash., chair of the Senate Appropriations Committee, meanwhile, said, “Merck is doing everything it can to protect its profits at the expense of patients who need their prescriptions to stay healthy and get treatment for everything from cancer to diabetes.”     

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