Pharma Company Sues Biden Administration Over Drug-Pricing Policy

Pharmaceutical company Merck filed a lawsuit against the Department of Health and Human Services Tuesday, claiming a portion of the Inflation Reduction Act that allows Medicare to negotiate drug prices violates the Fifth Amendment.

“This ‘Drug Price Negotiation Program’ is a sham,” Merck’s lawyers wrote in the complaint. “It involves neither genuine ‘negotiations’ nor real ‘agreements.’ Rather, once HHS unilaterally selects a drug for inclusion in the program, its manufacturer is compelled to sign an ‘agreement’ promising to sell the drug to Medicare beneficiaries at whatever ‘fair’ price the agency dictates.”

Any drugs HHS selects for negotiations will be subject to minimum discounts ranging from 25 percent to 60 percent.

Merck’s legal team argues that this provision violates the Fifth Amendment’s guarantee that the government will provide just compensation for private property obtained for public use and that it violates the First Amendment by “conscripting companies to legitimize government extortion.”

Merck is the first major drug company to challenge the new rule, and has filed its suit in the US District Court for the District of Columbia.