Drugmakers sue over Medicare’s new pricing rules, potentially setting the stage for a SCOTUS showdown
Bitter pill… Pharma giants are taking legal action to try to shut down a new drug-pricing law that could cost them billions. Some 65M Americans (most age 65 and older) are enrolled in Medicare, a federal health-insurance program — and the largest buyer of prescription drugs. Under President Biden’s Inflation Reduction Act, Medicare would be able to negotiate discounts of up to 60% on numerous prescription drugs. Merck says its lucrative diabetes and cancer drugs would be subject to a “sham” negotiation program, which starts in 2026 with an initial round of 10 drugs.
This month: Merck and Bristol-Myers Squibb filed suits against the gov’t, arguing the policy is unconstitutional and could hit blockbuster drugs (some of which make up a quarter of their annual sales).
Last week: Eli Lilly's CEO said the potential revenue loss could also stunt R&D of future drugs.
FYI: If companies don't comply, they’d face fines that are several times higher than their daily drug revenue and can be avoided only if they pull out of Medicare.
Refill relief… Lawmakers have fought for years to curb skyrocketing prescription costs. One study indicated that initial prices for new drugs have jumped 20% annually during the past 15 years. Last year nearly a fifth of US adults said they skipped or delayed taking medicine because of the cost. AARP said Medicare's new negotiations could save qualifying Americans an average of $800/year.
Solutions can come with side effects… By lowering drug costs for Medicare, the program could ease Rx affordability for millions and save taxpayers $102B through 2031. But as more drugmakers argue that it’s a threat to their revenue and research, the legal backlash is expected to intensify — and could end up in the Supreme Court.