Lawsuits filed in early June by Merck & Co. and the U.S. Chamber of Commerce seek to halt drug price controls established by the Inflation Reduction Act (IRA).
The two suits contend that it is unconstitutional to allow the Centers for Medicare & Medicaid Services (CMS) to force drug companies into “negotiations” that will result in reductions of drug prices. CMS is expected to name the first 10 drugs to be targeted for price controls in September, giving makers of those 30 days to “negotiate” a price.
“Both lawsuits contended that price controls would force drugmakers to pull back on developing new drugs, causing long-term harm to Americans and their health,” Reuters reported. Both suits are filed against the U.S. Department of Health & Human Services (HHS) and CMS, as well as HHS Secretary Xavier Becerra and CMS Administrator Chiquita Brooks-LaSure.
Merck’s lawsuit, filed June 6 in the U.S. District Court for the District of Columbia, argues that IRA’s provisions violate the Fifth Amendment, which requires the government to give fair compensation when it takes private property for public use, Reuters reported. Merck also argues the IRA goes against the First Amendment, by forcing companies to concede in writing that the prices set by CMS are fair, Reuters said.
“This is not ‘negotiation.’ It is tantamount to extortion,” says Merck’s suit, a sentiment echoed by the Chamber of Commerce lawsuit, filed June 9 in Dayton Federal Court.
“The IRA uses the term ‘negotiation’ to mislead the public into believing that a voluntary and fair bargaining process will take place,” says the Chamber of Commerce suit. “The reality, however, is that Congress has not set up a negotiation at all. Congress created an unprecedented, one-sided regime that forces manufacturers to sell drugs at government-set prices. The appropriate term for this is ‘mandated price control,’ not ‘negotiation.’ ”
Under the law, once a medicine is chosen for negotiation, the penalty for refusing to negotiate is “an escalating daily ‘excise tax’ starting at 186% of the medicine’s daily revenues from all sources, not just Medicare, and eventually reaching 1,900%,” an opinion piece in The Wall Street Journal noted. “Congress’s Joint Committee on Taxation projected that this ‘tax’ would raise no revenue. Since no company could afford to resist, none would ever pay it.”