Merck is suing the federal government about a proposal to negotiate Medicare drug pricing, branding the initiative an extortion scheme.
The initiative, outlined in the Inflation Reduction Act and anticipated to save taxpayers billions of dollars in the upcoming years, is being challenged by the manufacturer.
In a protest submitted on Tuesday, Merck claimed that the program did not include negotiation. Instead, it stated that the USA.
The Department of Health and Human Services chooses which medications are covered, sets the price, and threatens drug manufacturers with “a ruinous daily excise tax” if they don’t comply.
The drugmaker said in the complaint submitted in the US that “it is extortion.”
The District of Columbia’s district court.
The Rahway, New Jersey-based pharmaceutical company also stated that it anticipates that starting later this year, “the IRA’s scheme” will include its diabetes medication Januvia.
In a prepared statement, Secretary of Health and Human Services Xavier Becerra stated they intend to “vigorously defend” the proposed medication price agreement.
“The law is on our side,” he declared.
Becerra, his office, and Chiquita Brooks-LaSure, the head of the Centers for Medicare and Medicaid Services head, are all defendants in the lawsuit.
In its complaint, Merck claimed that the IRA’s proposed strategy assumes that federal agents will meet with pharmaceutical companies to discuss voluntary price deals.
The drugmaker insisted that the scheme doesn’t entail any formal conversations or agreements.
It was claimed that HHS chooses the medications to be covered and then pressures the pharmaceutical companies to offer significant reductions under the threat of taxes.
The initiative, according to Merck, breaches some U.S. laws. The case claims that the government must provide “‘just compensation’ if it takes ‘property’ for public use,'” precisely like the Fifth Amendment mandates.
The pharmaceutical company pointed out that Congress might have simply authorized HHS to set a maximum price it would pay for a drug or use its negotiating position, but it would have given pharmaceutical companies the option to withdraw from negotiations.
Instead, the government, according to Merck, uses the fear of harsh fines to demand pharmaceuticals and refuses to pay fair value, forcing the manufacturers of the drugs “to smile, play along, and pretend it is all part of a ‘fair’ and voluntary exchange.”
The complaint declares, “This is political Kabuki theater,” warning that enabling drugmakers to back out of negotiations runs the danger of upsetting Medicare beneficiaries who would not be able to obtain their drugs.
Medicare is a nationally financed insurance program primarily for adults over 65.
Republican senators have also slammed President Joe Biden’s administration for the plan, pointing out that it would make drugmakers hold off on releasing novel medications that might be the topic of negotiations.
The federal government will likely soon issue guidelines for negotiating prescription costs before publishing a list of 10 drugs for which price discussions will begin in 2019 in September.
With the implementation of the proposal, the federal government will finally engage in direct negotiations with pharmaceutical firms to determine the pricing of some of Medicare’s most expensive medications.
Drug companies now inform Medicare of the cost of a prescription, allowing the federal government and Medicare recipients to foot the bill.
Price concessions won’t become effective until 2026.
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