Merck, a pharmaceutical company, filed a lawsuit against the federal government, over a new legislation which allows Medicare to negotiate prices directly with pharmaceutical companies. Democrats passed the Medicare-negotiation program last year under the Inflation Reduction Act, as a way to lower drug prices. Merck claims that the law is unconstitutional, and would violate their First and Fifth Amendment rights.
Only a few drugs would be subject to Medicare negotiation, and only after they have been on the market without competition for a few years. Pharmaceutical executives have argued that the Medicare-negotiation program is a threat to new cures and have started to reassess their drug development plans.
According to the government’s guidelines, the drug makers could negotiate with Medicare and even make a counteroffer on pricing. In 2026, the first ten drugs will be subject to negotiation, with widely used diabetes drug Januvia likely among the first. Merck’s cancer drug, Keytruda, could also be targeted in 2028, along with other health care drugs.
Merck’s lawsuit could have implications for the development of new drugs and the cost of drugs for patients. The company argued that the law violates their purpose of engaging in innovative research that saves lives, which generated $14.5 billion in profits last year.
