‘Borders On Extortion’: Big Pharma Company Sues Biden Admin Over Drug Pricing Rules

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Pharmaceutical company Merck & Co., Inc. sued the Biden administration on Tuesday over its “Drug Price Negotiation Program,” arguing it violates the Constitution by forcing companies to enter into agreements with the Department of Health and Human Services (HHS) on pain of financial penalty.

The program, approved through the Inflation Reduction Act, enables the HHS to negotiate prices for high-cost prescription drugs, imposing an excise tax on companies that “refuse to negotiate.” The lawsuit alleges the program violates the Fifth Amendment by taking private property without providing “just compensation,” and the First Amendment by compelling companies to “legitimize government extortion” and participate in “political deception.”

The program is “a sham” that involves “neither genuine ‘negotiations’ nor real ‘agreements,'” the lawsuit filed in the U.S. District Court for the District of Columbia alleges.

“Rather, once HHS unilaterally selects a drug for inclusion in the program, its manufacturer is compelled to sign an ‘agreement’ promising to sell the drug to Medicare beneficiaries at whatever ‘fair’ price the agency dictates, which must represent at least a 25% to 60% discount,” the lawsuit states. (RELATED: Inflation Reduction? Dems’ Climate Spending Spree Could Cost $1.2 Trillion, Analysts Say)

: A Merck sign stands in front of the company's building on October 2, 2013 in Summit, New Jersey. (Photo by Kena Betancur/Getty Images)

: A Merck sign stands in front of the company’s building on October 2, 2013 in Summit, New Jersey. (Photo by Kena Betancur/Getty Images)

Joe Grogan, nonresident senior fellow at the USC Schaeffer Center, called the program “a price fixing regime a Soviet bureaucrat would be proud of.”

“This slow rolling government takeover of the pharmaceutical industry will strangle innovation, denying essential medicines to patients desperate for newer, more effective treatments,” Grogan said in a statement.

The HHS intends to launch the program on September 1 with the publication of its first ten “negotiation-eligible drugs.” Merck believes its anti-diabetes drug, Januvia, will be one of those chosen in September, per the lawsuit. In an open letter published Tuesday, Merck said that the program will have “devastating consequences for millions of patients in need” by limiting innovation.

“Under the IRA, the government will take Merck’s patented innovations by coercing the company to provide third parties with access at prices the government sets,” the company wrote.

Josh Blackman, professor of law at the South Texas College of Law Houston, said in a statement that the government cannot “force pharmaceutical companies to ‘sell’ their patented drugs.”

“This new mandate borders on extortion and is likely unconstitutional,” he said.

In a statement provided to the Daily Caller News Foundation, HHS Secretary Xavier Becerra said, “We’ll vigorously defend the President’s drug price negotiation law, which is already lowering health care costs for seniors and people with disabilities. The law is on our side.”

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