USA — Merck & Co, a prominent pharmaceutical company, has taken legal action against the U.S. government, filing a lawsuit to seek an injunction against the drug price negotiation program outlined in the Inflation Reduction Act (IRA).

The company argues that this program infringes upon the Fifth and First Amendments of the U.S. Constitution.

According to news agency Reuters, Merck plans to file the lawsuit in the U.S. District Court for the District of Columbia.

At the heart of the lawsuit is the contention that the IRA would compel drug manufacturers to engage in price negotiations for medications within the government’s Medicare health insurance program, but at rates below the market value.

Merck asserts that such a provision violates the Fifth Amendment, which stipulates that the government must provide just compensation for private property taken for public use.

The United States is known for having higher medicine costs compared to other countries. The drug pricing reform initiated by the Biden administration aims to generate annual savings of US$25 billion by 2031 through price negotiations within Medicare.

However, the pharmaceutical industry argues that this law, passed last year, will lead to profit losses that could impede their ability to develop innovative new treatments.

Following the release of the government’s roadmap for price negotiations in March, industry lobbyists and lawyers predicted that pharmaceutical companies would file lawsuits arguing that the government’s actions are inconsistent with the U.S. Constitution.

Merck’s statement regarding the IRA expresses concern over the law’s use of penalties to requisition medicines without providing fair compensation.

The company perceives it as a coercive measure that attempts to create the illusion of a “fair” and voluntary exchange. Merck characterizes this situation as “political Kabuki theater.”

In addition to the Fifth Amendment violation, Merck also contends that the law would force companies to sign agreements affirming the fairness of the prices, which it argues infringes upon the First Amendment’s protection of free speech.

The lawsuit has been filed against the U.S. Department of Health & Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS), as well as HHS Secretary Xavier Becerra, and CMS Administrator Chiquita Brooks-LaSure.

Merck has stated its intention to pursue the litigation all the way to the Supreme Court if necessary.

The implementation of the first-ever Medicare drug price reduction process is scheduled to begin in September, with CMS identifying the ten most costly drugs.

Following negotiations on this initial group of drugs, new prices will take effect in 2026, potentially leading to a reduction in industry sales by US$4.8 billion in the first year.

The outcome of Merck’s lawsuit and the overall implications for drug pricing in the U.S. healthcare system remain to be seen.

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