Marking the first legal challenge of its kind, pharma giant Merck & Co. took to the courts on Tuesday, directly contesting the U.S. government over the Medicare drug price negotiation program. The Big Pharma company’s lawsuit, filed in the U.S. District Court for the District of Columbia, contends the program’s basis — the Inflation Reduction Act (IRA) — infringes upon the Fifth and First Amendments of the U.S. Constitution.

The legislation has put pricing pressure on the industry and contributed to a wave of recent M&A deals.

Merck, and the wider pharmaceutical industry, are raising the alarm. They claim the law, in effect, coerces drugmakers into accepting below-market rates. The lobbying group PhRMA (Merck is a member) released a statement in April 2023 arguing that the Inflation Reduction Act threatens patient access and complicates R&D efforts. In addition, PhRMA accused CMS of not complying with legal requirements by providing only 30 days for commenting on the complex pricing program.

Merck’s litigation follows the Biden administration’s drug pricing reform, poised to shave some $25 billion annually off Medicare’s drug costs by 2031. Prescription medicine costs in the U.S. are the highest globally. For its part, Merck is framing the negotiation talks as ‘coercive,’ even amounting to ‘extortion.’ Merck also argues the negotiations violate their First Amendment rights, curtailing their free speech.

We have contacted the Centers for Medicare & Medicaid Services (CMS) to request an official statement regarding Merck’s lawsuit and the potential impact on the Inflation Reduction Act.

Below, we offer the timeline below to capture the events leading up to the lawsuit:

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Filed Under: Drug Discovery, Drug Discovery and Development
Tagged With: drug pricing reform, First Amendment, Inflation Reduction Act, Medicare, Medicare legal challenge, Merck, PhRMA
 

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