USA —Biogen CEO Chris Viehbacher has expressed his intention to explore the possibility of taking legal action similar to Merck & Co.’s recent lawsuit against the Inflation Reduction Act (IRA), as reported by Bloomberg.
The IRA grants Medicare the authority to directly negotiate prescription drug prices with manufacturers for the first time.
The Pharmaceutical Research and Manufacturers of America (PhRMA) lobby group has also indicated its potential opposition to the legislation, which Merck claims is akin to extortion
Merck’s lawsuit raises several arguments, including the violation of their rights due to the government appropriating their property without providing proper compensation.
The company further argues that the price negotiations mandated by the IRA are deceptive, forcing companies to appear as though they willingly agree to government pricing under the threat of severe taxes and penalties.
Merck is seeking a stay from the District Court for the District of Columbia to halt any negotiations involving the company.
In response to the ongoing case, White House press secretary Karine Jean-Pierre affirmed that there is no constitutional obstacle preventing Medicare from engaging in negotiations to lower drug prices. She expressed confidence in the administration’s belief that they will succeed in their endeavors.
The IRA empowers Medicare to negotiate prices for an expanding list of treatments starting in 2026, with projected savings of nearly US$100 billion for Medicare by 2031.
The Centers for Medicare and Medicaid Services (CMS) will release a list later this year, identifying the initial ten Medicare Part D medicines affected by the legislation.
According to Merck, their diabetes drug Januvia (sitagliptin) is expected to be subject to the program from 2023, while other products such as Janumet (sitagliptin/metformin) and Keytruda (pembrolizumab) are projected to become part of the program in subsequent cycles.
Additionally, Merck is currently developing a subcutaneous version of Keytruda, an immunotherapy for cancer, with the hope of sustaining the therapy’s efficacy and profitability into the next decade.
However, Medicare guidelines issued in March indicate that this new self-administered formulation, estimated to generate peak sales of up to US$14 billion in 2031 by Wells Fargo & Co. analyst Mohit Bansal, may be grouped together with the original Keytruda during price negotiations due to their shared key ingredient.
Bloomberg Intelligence analyst Holly Froum expressed her preliminary perspective, suggesting that Merck’s arguments may lack strength since the company has the option to withdraw from Medicare.
Froum believes that Merck’s “takings” argument is weak if the company can withdraw from rebate agreements and avoid participating in the challenged negotiation program.
Meanwhile, Nick Shipley, chief advocacy officer for the Biotechnology Innovation Organization (BIO), anticipates the possibility of more companies initiating their own legal actions in response to the case.
While Biogen weighs its legal options, industry observers anticipate the possibility of additional companies filing their own lawsuits.
Johnson & Johnson and Eli Lilly declined to comment on the matter, leaving the landscape of potential legal challenges against the IRA open for further exploration.
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