Merck sues government over drug price negotiation

(TNS) — 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.”