'Shameless Greed': Pharma Giant Merck Sues to Kill Medicare Drug Price Negotiations

Merck on Tuesday became the first pharmaceutical company to sue the Biden administration over a recently enacted law that empowers Medicare to directly negotiate the prices of a small number of high-cost prescription medicines with drug makers—a change that could threaten Merck's bottom line.

Filed in a federal court in Washington, D.C., Merck's lawsuit characterizes the drug price negotiation policy established by the Inflation Reduction Act as "tantamount to extortion" and claims the "singular purpose of this scheme is for Medicare to obtain prescription drugs without paying fair market value."

The lawsuit against the Health and Human Services Department (HHS) and the Centers for Medicare and Medicaid Services (CMS) also alleges that the drug price negotiations make "a mockery of the First Amendment" by "conscripting companies to legitimize government extortion."

The suit asks the court to "declare that the program effects compensable takings under the Fifth Amendment, and enjoin its compelled 'agreements' under the First Amendment."

Patient advocates and lawmakers responded with disdain to Merck's lawsuit, which likely won't be the last from an industry that fights aggressively to maintain its power to drive up prices at will. The Centers for Disease Control and Prevention released data last week showing that more than 9 million Americans are delaying medication refills, skipping doses, and taking smaller dosages than prescribed due to high costs.

"Merck is doing everything it can to protect its profits at the expense of patients who need their prescriptions to stay healthy and get treatment for everything from cancer to diabetes," said Sen. Patty Murray (D-Wash.), a senior member of the Senate Health, Education, Labor, and Pensions Committee. "While big drug companies may not want to be at the negotiating table, the American people are sick and tired of giant pharmaceutical corporations putting their executives' paychecks above patients."

Keytruda, Merck's cancer drug, carries an annual list price of $175,000, and the U.S. government has spent billions helping patients cover the cost of the medicine in recent years.

"Merck is claiming the U.S. Constitution requires the U.S. government and people to be suckers. That's not true," Robert Weissman, president of the consumer advocacy group Public Citizen, said in a statement Tuesday. "This lawsuit is a desperate attempt by the industry to beat back popular legislation that would curtail Big Pharma's ability to price gouge Medicare and secure monopoly profits. Full stop."

"While Big Pharma's litigation gambit plays out, it is critical that the federal government continue its preparation for price negotiations," Weissman added. "Delay in the commencement of long-overdue negotiations will result in billions of dollars in excess costs for taxpayers and consumers."

"No one needs to read Merck's fancy lawyer talk or PR spin to know what this is all about—it is about them wanting to continue to fleece taxpayers and gouging seniors."

In September, CMS is expected to release a list of the first 10 Medicare Part D drugs that will be subject to direct price negotiations. Manufacturers of the selected drugs will then have until the following month to sign an agreement to conduct negotiations, and the agreed-upon prices will take effect in 2026.

Dozens of additional prescription drugs covered by Part D or Part B will be subject to price negotiations in the years following 2026. Though the prices of just a small number of drugs will be negotiated under the Inflation Reduction Act provisions, the policy could have a significant impact given that a sliver of medicines accounts for a large percentage of Medicare's prescription drug spending.

The Congressional Budget Office concluded earlier this year that "price negotiation will lower average drug prices in Medicare and will reduce the budget deficit by $25 billion in 2031."

As The New York Times noted Tuesday, Merck's Keytruda "could be among the first products targeted when negotiations begin in 2028 on drugs administered in a healthcare setting."

"Merck had been expecting to bring in significant revenue from a new formulation of Keytruda it is developing that can be more easily given under the skin," the Times reported. "That could be subject to negotiation, too, under the government's plans for the program."

Margarida Jorge, head of the Lower Drug Prices Now campaign, said Tuesday that Merck's lawsuit is "nothing but a political stunt motivated by the same shameless greed that we're used to seeing from drug corporations that have made decades of inflated profits at the expense of patients' health and taxpayers' hard-earned money."

"No one needs to read Merck's fancy lawyer talk or PR spin to know what this is all about—it is about them wanting to continue to fleece taxpayers and gouging seniors so they can keep sky-high profits and soaring executive pay," said Jorge. "It's time for big drug corporations like Merck to give up their monopoly control over prices and negotiate fair prices for the medicines we need."