The pharma industry has voiced loud complaints about the Biden administration's Inflation Reduction Act, specifically focusing on a clause that will allow Medicare to negotiate the prices of top-selling pharmaceuticals. But now the industry is taking its arguments to the courts.
In the first lawsuit of its kind, Merck & Co. is suing the Department of Health and Human Services (HHS) for alleged violations of the First and Fifth Amendments to the U.S. Constitution, Reuters reports.
Under the Inflation Reduction Act, Medicare will begin negotiating prices for the drugs that it spends the most on beginning in 2026. Because companies can't exactly walk away from these negotiations, some industry leaders have said the setup is akin to "price controls."
Now, Merck alleges the negotiation setup is a violation of the Fifth Amendment, which requires the government to fairly compensate companies or individuals for property that is used for the public good, Reuters reports.
In addition, the company says the Medicare pricing negotiation setup would force companies to sign contracts that they wouldn't otherwise enter. Merck believes that's an alleged violation of the First Amendment, according to Reuters.
The lawsuit (PDF) doesn't exactly come as a surprise. After President Joe Biden signed the Inflation Reduction Act in August, industry watchers predicted a wave of industry resistance, both in the courts and in the industry's public communications.
Since then, pharma CEOs have publicly blasted parts of the bill, particularly one that enables drug negotiations for small molecules faster than biologics. Industry execs have said the rule will shift R&D investment away from potentially promising small-molecule drugs.
Merck filed its lawsuit against HHS and top federal healthcare officials Tuesday in Washington, D.C., federal court, Reuters reports.
This isn't the first time Merck has clashed with the Biden administration's HHS. Last year, the company sued over a fine tied to its violations of the government's rules for pharmacies in 340B hospitals, which provide discounted drugs.