USA — Bristol Myers Squibb (BMS) has taken legal action against the U.S. government in an effort to block the implementation of the Medicare drug price negotiation program.
The program, a key element of President Joe Biden’s Inflation Reduction Act (IRA), is expected to include one of Bristol Myers Squibb’s top-selling medicines.
The pharmaceutical company argues that the program violates the Fifth and First Amendments of the U.S. Constitution. This lawsuit marks the third legal challenge against the new law.
The pharmaceutical industry, concerned about reduced profits and limited innovation in groundbreaking treatments, has expressed opposition to the program. U.S. drugmaker Merck & Co., and the U.S. Chamber of Commerce filed lawsuits last week contesting the price reduction plan.
Americans currently pay more for prescription medicines than residents of any other country.
The Biden administration aims to save US$25 billion annually by 2031 by allowing Medicare, the government health plan for individuals aged 65 and above, to negotiate prices for certain high-cost medicines.
One of Bristol Myers Squibb’s shared medications, the blood thinner Eliquis, cost the U.S. government over US$12.57 billion in 2021.
Analysts predict that it will be among the ten drugs initially selected for price negotiations in September, with the new prices taking effect in 2026.
The lawsuit filed by Bristol Myers Squibb in the U.S. District Court for the District of New Jersey argues that the price negotiation requirement would force pharmaceutical companies to sell their medicines to Medicare at significantly discounted rates below the market value.
Additionally, Bristol Myers Squibb alleges that the negotiation mandate violates both the First and Fifth Amendments.
The company anticipates that its blood-thinning medication, Eliquis, will be subject to negotiations this year, and its cancer medication, Opdivo, will be included in a subsequent round.
In its complaint, Bristol Myers Squibb compares the negotiation process to the government dictating the purchase price of a house, significantly below its market value, and then coercing the homeowner to accept the discounted price under the threat of substantial taxes.
The company argues that such an arrangement is unfair and unjust.
Furthermore, Bristol Myers Squibb claims that the law obligates manufacturers to publicly affirm that the government’s “price setting” constitutes a genuine negotiation resulting in a fair price, even when it does not.
White House Press Secretary Karine Jean-Pierre responded to the lawsuit, stating that “Big Pharma regularly forces Americans to pay many times what they do customers in other countries for the exact same medicines.”
She expressed confidence in the administration’s ability to prevail in court, asserting that the Constitution does not prohibit Medicare from negotiating lower drug prices.
Other lawsuits
Merck and the U.S. Chamber of Commerce, which has drug company executives on its board and pharmaceutical manufacturers as members, also challenge the constitutionality of allowing Medicare to negotiate prices.
They argue that it infringes on multiple constitutional protections and poses a threat to the development of new medications.
Merck, in its complaint filed in the U.S. District Court for the District of Columbia, describes the program as a “sham” that lacks true negotiations and genuine agreements.
According to the complaint, once the Department of Health and Human Services (HHS) selects a drug for inclusion in the program, manufacturers are compelled to sign an agreement to sell the drug to Medicare beneficiaries at a price determined by the agency, representing at least a 25% to 60% discount.
Merck characterizes this as “tantamount to extortion.”
Merck further contends that the provision violates the Fifth Amendment’s “takings” clause since it permits Medicare to obtain patented drugs from manufacturers without fair market compensation, under the threat of severe penalties.
The company asserts that patented pharmaceuticals are private property protected by this constitutional clause.
Moreover, the negotiations process is argued to infringe on the First Amendment by coercing manufacturers into accepting government-dictated prices and publicly affirming their agreement with those prices.
Merck expects its diabetes drug Januvia to be among the drugs subject to negotiation in September, while its blockbuster cancer treatment Keytruda and diabetes drug Janumet are anticipated to face negotiations in the future.
These medications generate billions of dollars in sales for the pharmaceutical giant.
The U.S. Chamber of Commerce has also filed a lawsuit, asserting that the negotiation provision violates constitutional protections for free enterprise.
In addition to the Fifth and First Amendments, the chamber argues that the Eighth Amendment is violated by imposing excessive fines on drugmakers who refuse to negotiate and continue selling their products in the Medicare market.
The chamber claims that the IRA is designed to eliminate political and legal accountability for the HHS decision-making process and maximize the agency’s unrestricted power.
One of the chamber’s members, AbbVie, manufacturers Imbruvica, a medication used in the treatment of certain blood cancers.
The chamber’s lawsuit suggests that Imbruvica is likely to be included in the initial list of drugs subject to negotiation.
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