Pharmaceutical company Merck has filed a lawsuit against the US government over a law that grants Medicare the power to negotiate drug prices. Passed last year, the Inflation Reduction Act has been deemed unconstitutional, with Merck contending it may obstruct future investments in cancer treatments and other medications. This is a first for Medicare, which now has the ability to negotiate lower prescription drug prices in doctors' offices and pharmacies.
Merck argues against the drug price negotiation program, alleging it violates the Fifth Amendment by compelling them to provide drug products at government-determined prices without just compensation. Additionally, the company's complaint claims the law infringes on the First Amendment by requiring manufacturers to express agreement with the Department of Health and Human Services' (HHS) 'fair' prices.
No comments have yet been provided by the HHS or the Centers for Medicare and Medicaid Services (CMS). The current law allows Medicare to negotiate prices for a limited number of costly drugs. In September, the government will publish the first ten Medicare Part D drugs chosen for negotiation, with new prices to become effective in 2026. The government will also select more Part B or Part D drugs every year for negotiation.
Multiple factors will be considered by CMS, such as clinical benefits and the price of therapeutic alternatives in the formation of initial offers. Manufacturers will have the chance to negotiate through a series of steps in the process. It is estimated that over a ten-year span, the negotiation program will reduce the federal deficit by $237 billion. The law also levies penalties on companies that inflate drug prices too quickly, limiting Medicare out-of-pocket costs and capping Medicare beneficiaries' monthly insulin costs at $35.
