Chamber Suit Challenges Medicare's Drug Negotiations Program

The legal action comes days after Merck & Co. filed suit calling the mandate 'unconstitutional.'

The U.S. Chamber of Commerce on Friday filed suit against the federal government, claiming that the looming Medicare Drug Price Negotiation Program "violates fundamental protections for free enterprise enshrined in our Constitution."

Arguing that the price controls -- a component of the 2022 Inflation Reduction Act -- "would have long-term implications for free enterprise and U.S. competitiveness," the business lobby warns that such a mandate could spread to other areas of the private sector. 

"If the government can set price controls for essential medicines through a black-box regime without allowing for judicial review, the government can do the same for other essential industries, which would be disastrous for our economy and for individual rights," the Chamber says.   

"When the government caps prices, it caps innovation and endangers access to better treatments—harming patients the most. The new IRA provisions establish an artificial and arbitrary system for devising price caps that will jeopardize medical breakthroughs for individuals with life-threatening and chronic illnesses."

The Chamber suit was filed in U.S. District Court in Dayton, Ohio.

The Drug Price Negotiation Program allows Medicare, for the first time ever, to leverage its unmatched market power to negotiate with drug makers for certain high-price drugs. The negotiations start in September but will be limited to 10 drugs named by Medicare.

The Chamber says that calling the program a "negotiation" is a misnomer.

"The price imposed by the government at the end of the ‘negotiation’ cannot be declined by the manufacturer," the Chamber says. "The only way to escape the price is to leave the Medicare program altogether, but that cannot be accomplished in time to avoid the government-set price on some sales or the excise tax penalty on others."

"This would be devastating for patients in Medicare and would impose crushing financial consequences on manufacturers, further inhibiting their ability to develop and deliver treatments to the market."  

Earlier this week, Merck & Co. filed suit in a Washington, D.C. federal district court, alleging that the price negotiation program was unconstitutional, and would hamstring the "bio-pharmaceutical sector's ability to address health threats." 

"By coercing Merck to provide its drug products at government-set prices, the program takes property for public use without just compensation in violation of the Fifth Amendment," Merck says.

"In addition, the IRA creates the false impression that innovators like Merck are voluntary participants in its program by coercing them to sign an ‘agreement’ conveying that the government-set prices are the ‘fair’ result of a ‘negotiation.’ That compelled mirroring of the government's political message violates the First Amendment."

Patient advocacy groups responded with derision and scorn this week to the news that Merck & Co. is suing the federal government to block the looming start of Medicare's Drug Price Negotiation Program.

"Merck's ridiculous lawsuit is the equivalent of a toddler throwing a temper tantrum," says Richard Fiesta, executive director of the Alliance for Retired Americans.

"Americans pay the highest prices in the world for prescription drugs and too many seniors must choose between putting food on the table and paying for their medicine. That is because corporations like Merck have been allowed to charge taxpayers whatever they want for their drugs," Fiesta says.