Merck sues US government to halt drug price negotiation law

STORY: Pharmaceutical giant Merck sued the Biden administration on Tuesday over a federal law that allows Medicare to negotiate drug prices.

In a scathing complaint, Merck slammed the drug price negotiation program in the recent Inflation Reduction Act, arguing it violates the U.S. Constitution and calling it “tantamount to extortion.”

Merck is seeking to stop the law from taking effect in 2026, marking the first attempt by a drugmaker to challenge the program.

Drug manufacturers say it will result in loss of profits that will force them to pull back on developing groundbreaking new treatments.

Americans pay more for medicine than any other country, and the Biden administration’s drug pricing reform aims to save $25 billion annually by 2031 through price negotiations for Medicare.

Merck’s lawsuit argues that the new law forces drug makers to negotiate prices that are below market rates. Merck asserts this violates the part of the Fifth Amendment that requires the government to pay just compensation for private property taken for public use.

It also claims the law will force companies to sign agreements conceding that the prices are fair, which it says is a violation of the First Amendment’s protections of free speech.

Government representatives were not immediately available for comment.

Shares are Merck fell nearly 2-percent in morning trading.

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