Pharmaceutical company Merck sued the federal government on Tuesday over a bill that would for the first time give Medicare the power to negotiate prices directly with pharmaceutical companies.
Merck’s lawsuit, filed in federal court in Washington, is the pharmaceutical industry’s most significant move yet against drastic changes in healthcare policy that will take effect from 2026. Democrats pushed through the Medicare bargaining program last summer. It is a provision of the Inflation Control Act and is framed as a means of reducing drug prices.
Only some drugs are subject to negotiations with Medicare, and apply only after years on the market without competition. But drug company executives have publicly described the Medicare bargaining program as a terrifying threat to new treatments.some said so re-evaluate their Drug discovery plan.
In the Merck lawsuit, the company’s attorneys argue that the Medicare bargaining program is unconstitutional. They argued that the program would force Merck to offer products at government-set prices, and that the program, which barred the government from taking private property for public use without just compensation, was a 5th Amendment to the Constitution. It alleges that it violates the terms of the article. They also allege that the program violates Merck’s First Amendment rights by forcing Merck to sign agreements it disagrees with at the end of negotiations.
according to Under federal guidance on the program’s implementation plan, the procedure would allow drug companies to make counteroffers on pricing first, then reject Medicare’s final offer, and if unsatisfied, withdraw without agreement. It is possible and taxable.
In September, the government will announce the first 10 drugs to be negotiated in 2026. Merck’s widely used diabetes treatment Januvia likely to be on that list.
The program could also affect Merck’s long-term plans for its blockbuster cancer drug Keytruda, Golden Goose. It could be one of the first products to be targeted when talks begin on point-of-care drugs in 2028.
The current version of Keytruda, which is administered as an IV, will face its first competition in the same year, so its sales are expected to decline whether it is included in the program or not. But Merck was developing a new formulation of Keytruda that could be administered subcutaneously more easily and expected to bring in significant revenue. Based on government plans, this could also be subject to negotiations.
Merck said in a statement on Tuesday that the law “unlawfully undermines our core purpose of engaging in innovative research that saves and improves lives.” The company made a profit of $14.5 billion last year.
