USA — As the battle intensifies over a new law aimed at lowering prescription drug prices, Johnson & Johnson’s pharmaceutical unit, Janssen Pharmaceuticals, has entered the fray, arguing that the law constitutes a confiscation of property.
Following in the footsteps of other pharmaceutical giants like Bristol Myers Squibb and Merck & Co., J&J filed a lawsuit in the U.S. District Court for New Jersey, while the trade group Pharmaceutical Research and Manufacturers of America pursued its legal challenge in different federal venues.
Asserting violations of their constitutional rights, J&J contends that the Inflation Reduction Act (IRA) encroaches on their property rights.
The law poses particular concern for J&J as it anticipates price negotiations for its top-selling drug, Xarelto, to be part of the program, with an initial target list set to be unveiled by September 1.
The pharmaceutical industry has long thrived in the U.S. market due to the absence of mechanisms, such as price negotiations, to control medication costs.
This has resulted in Americans paying more than three times the price for brand-name drugs compared to individuals in other countries, as reported by a 2021 study funded by the U.S. government and conducted by the Rand Corporation.
Passed in 2022, the IRA aimed to address this disparity by granting Medicare the authority to negotiate drug prices for senior citizens for the first time.
By September 1, the Centers for Medicare and Medicaid Services will release the first 10 drugs selected for negotiation, with new prices taking effect in 2026.
J&J, along with other drug manufacturers, argues that the law will lead to dictated prices and penalties rather than fostering a fair agreement between the government and individual companies.
In their lawsuit, J&J contends that this constitutes a violation of the Fifth Amendment, which prohibits the taking of private property for public use “without just compensation.”
In harsh terms, J&J states that the law represents a “straightforward confiscation of constitutionally protected property,” akin to the government seizing a car on unfavorable terms and threatening to take away one’s home if they don’t “agree” that the taking was “fair.”
J&J also asserts that the law violates their First Amendment rights, as it would coerce the company into falsely claiming agreement with the government on a negotiated “fair” price. According to J&J, this is not the case.
Furthermore, J&J highlights the substantial investment it has made in research and development, amounting to US$65.7 billion since 2016.
They argue that the law will ultimately harm patients by deterring investment in studies of new and existing drugs.
“It deprives tomorrow’s patients of innovative medicines made possible by protected patent rights and market-based pricing, and the future generics enabled solely by today’s innovator drugs,” J&J argues.
“And it harms today’s patients by threatening access to existing therapies and eviscerating incentives to continually improve those therapies.”
Astellas Pharma has also recently joined the legal challenge, filing a lawsuit against the legislation, asserting that it is not only bad policy but also unconstitutional.
As the industry giants take a stand against the prescription price battle, the implications of the law’s outcome remain far-reaching, potentially reshaping the landscape of pharmaceutical pricing and patient access to vital medications.
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