In July 2023, Johnson & Johnson became the fourth large drugmaker to sue the US government over drug price negotiations in the Inflation Reduction Act (IRA). They join, Merck, Bristol Myers Squibb and Astellas in claiming that price negotiations by Medicare violate the First and Fifth Amendments of the US Constitution.
It is contended that the IRA price negotiation programme is unconstitutional as it violates the Fifth Amendment stipulation that the state needs to provide just compensation for any private property taken for public use. In addition, violations to the First Amendment are made as it forces drugmakers to agree that the discounted prices, as dictated by the Department of Health and Human Services, are fair.
The Inflation Reduction Act authorized Medicare to directly negotiate drug prices for select medications. Part B drugs may be eligible to be selected for negotiation starting in 2026 for prices effective in 2028. Manufacturers are required to pay a rebate to Medicare if a drug's price increase exceeds the rate of inflation [1]. The pharmaceutical industry has repeatedly criticized many of the law’s drug pricing provisions, arguing they will limit incentives for future treatment innovation. Despite this, the Biden Administration continues to support the IRA, arguing that the IRA’s drug pricing provisions are working to help to lower healthcare costs for seniors and people with disabilities.
At the beginning of July 2023, Merck filed a motion for summary judgment asking a federal judge to rule on its case against the US government over the IRA without going to trial. Here, Merck argued that the IRA’s Drug Price Negotiation Program ‘involves no genuine negotiations and no voluntary agreements’. According to the filing, instead, the IRA provision threatens pharmaceuticals companies with ‘enormous monetary penalties’, pushing them to provide access to their drugs at discounted prices that the government determines.
In addition, the US’s National Infusion Center Association, the Global Colon Cancer Association and the Pharmaceutical Research and Manufacturers of America filed lawsuits in federal court over aspects of the IRA. Here it was stated that the drug price negotiation program put in place by the IRA is ‘unconstitutional’, and ‘a government mandate disguised as negotiation’. Members of these trade groups include Merck and Bristol-Myers Squibb.
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Reference
1. GaBI Online - Generics and Biosimilars Initiative. Inflation Reduction Act explained [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2023 Aug 18]. Available from: www.gabionline.net/policies-legislation/inflation-reduction-act-explained
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