Merck, the pharmaceutical firm that manufactures Januvia, a widely prescribed Type 2 diabetes drug, filed a lawsuit against the Dept. of Health and Human Services. Merck wants a Washington D.C. Court to block the “Inflation Reduction Act” recently passed by Congress and approved by Pres. Biden. The Bill gives Medicare the right to substantially bring down the prices of drugs for Medicare enrollees.

Medicare is actually a federal government insurance program that helps to take care of the medical needs of people 65 years and older, and of younger individuals with disabilities or cancer that have already reached end-of-stage treatment. Yet Merck is opposing the power granted by the Bill to Medicare because it not only blocks drugmakers from pursuing the annual price hikes they put into effect annually. The Bill also directs pharmaceutical companies to pay rebates to Medicare and its enrollees.

The Act’s Medicare Prescription Rebate Program ensures drug makers like Merck will not impose long-term price increases on Medicare enrollees. This means increased prices if any and while the case is still pending in court, merits refund or rebate claims.

About Merck’s Legal Complaints Against the Dept. of Health and Human Services

Merck has petitioned a Washington D.C. judge to stop HHS from forcing drug companies to sign a drug price negotiation agreement. Merck calls the agreement a “sham” because drug companies are being asked to hand over control of private property without any just compensation. The drug firm calls the so-called sham agreement unconstitutional because it’s “tantamount to extortion.”

Under the negotiation agreements, drug companies are required to slash down prices by 25% to 60% below the recommended market selling price. Although the agreement covers only the cost of medications prescribed to senior citizens and other Medicare enrollees, there are about 60 million Americans covered by the government’s Medicare healthcare insurance.

Merck alleges in its lawsuit that non-compliance will cause the federal government to take the following actions:

1. Stifle new drug developments;

2. Impose excise tax on a daily basis at rates higher than the daily revenues earned by drug companies.

3. Requisition the patented products of pharmaceutical companies and resort to forced sales in order to acquire products for use by Medicare beneficiaries.

However, HHS Sec. Xavier Becerra is unperturbed because he strongly believes the law is on their side. All complaints put forward by Merck are in relation to price negotiations that intend to reduce the health care costs of senior citizens and persons with disabilities (PWD) covered by the government’s Medicare Health Insurance program.