Merck sues to prevent government drug price negotiations

Most, if not all, governments negotiate with pharmaceutical companies over drug pricing. Due to heavy lobbying by Big Pharma, U.S. laws prohibited negotiations. That’s why the U.S. has the highest drug prices in the world.

Finally, at long last, the recently-passed Inflation Reduction Act allows Medicare to negotiate drug pricing. But Big Pharma is pushing back. If you can’t lobby, sue!

This issue has Macro significance because the dollar impact is large. It also will impact millions of families.

I think the whole premise of suing over price negotiations is absurd. After all, other countries do this routinely and the U.S. government negotiates pricing over millions of other goods and services. Why should drugs be exempt?

Merck Challenges U.S. Government’s New Powers to Negotiate Drug Prices

Drugmaker’s lawsuit says Medicare’s drug-price negotiation program violates the company’s constitutional rights

By Joseph Walker, The Wall Street Journal, Updated June 6, 2023

Drugmaker Merck & Co. filed a lawsuit on Tuesday challenging the U.S. government’s plan to negotiate drug prices, saying it is unconstitutional.

Merck said in the lawsuit, filed in U.S. District Court in Washington, D.C., that Medicare’s drug-price negotiation program violated the company’s First and Fifth Amendment rights.

Medicare, the country’s biggest buyer of prescription drugs, gained the authority to negotiate the price of certain high-price medicines under the Inflation Reduction Act.

The program, which is expected to go into effect starting in 2026, could cost drugmakers like Merck billions of dollars in sales… [end quote]

This will impact the entire pharmaceutical sector, depressing the stock value of the companies.



$$$ of course! We have a culture here that glorifies the corporation. All social ills are cured by strong, healthy, profitable corporations of course.

Another factor in high drug prices is the fact Pharma markets like crazy. Lots of TV ads, lots of print ads. That all costs money! You’d be surprised how much that costs, on top of R&D expenses. You can’t advertise drugs in Europe like this. It saves a bunch of money.


Ok, help me out here.

The 1st protects freedom of speech, the press, assembly, and the right to petition the Government for a redress of grievances.

The 5th guarantees the right to a grand jury, forbids “double jeopardy,” and protects against self-incrimination.

Can any Constitutional attorney help me understand how either of these amendments are violated by having the government negotiate drug prices with a pharmaceutical company?


The Veteran’s Administration negotiates drug prices.

Part D, like Part C, was specifically written to shovel money to the private insurance industry. That is why the Part D legislation prohibited Medicare negotiating prices, but, rather, pay whatever the insurance and drug industries demand Medicare pay.



The Fifth Amendment requires “just compensation” when private property is taken for public use. The private property here are the pills, and public use is Medicare patients.

Is Congress allowed to use its taxing power to negotiate a lower price? The IRA includes an excise tax that is imposed when there is no negotiated price agreement, and that might be unconstitutional, depending on the details. As an alternative to the excise tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid. I think the excise tax alone would be unconstitutional, but the option to withdraw all business makes it all constitutional. This is certainly a harsh negotiation stance, but that seems to be what is required.

Can lower taxes be part of a federal purchase negotiation? Are any of these hypotheticals constitutional?:
A. “Sell Congress your house at half price or Congress will double your income taxes.”
B. “Sell Congress your house at half price and Congress will half your income taxes.”
C. “Sell Congress your house at half price or Congress will not buy any of your other houses.”

Congress has tried various fixes over the past 40 years, and yet the U.S. still has high drug prices. Drug prices are often set based on the total benefit to the patient. Extending life might be worth millions of dollars, and drug manufacturers want a large percentage of the total benefit. Drug prices are not based on the sunk R&D costs, production costs, or alternatives. Patents are often given for minor formulation changes. Insulin prices are the classic example of out–of-control prices. The IRA includes evidence about alternative treatments in the price negotiations. The price should be based on the net benefit compared to alternative treatments.

— links —

“Merck’s lawsuit argues that the new law violates the Fifth Amendment because it’s taking property for public use but not offering just compensation.”

“An excise tax will be levied on drug companies that do not comply with the negotiation process. The excise tax starts at 65% of a product’s sales in the U.S. and increases by 10% every quarter to a maximum of 95%. As an alternative to paying the tax, manufacturers can choose to withdraw all of their drugs from coverage under Medicare and Medicaid.”

“This debate and the concerns over drug pricing goes back over four decades. In fact, The Drug Price Competition and Patent Term Restoration Act of 1984 (generally referred to as the Hatch Waxman Act) was a major effort to reduce drug pricing by increasing generic competition”

U.S. Constitution: [The Congress shall have power] “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

U.S. Constitution First Amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

U.S. Constitution Fifth Amendment: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”


I am not sure of the appropriateness of using a tax “stick” to push drug companies to the negotiating table. But, insurance companies put drugs they don’t want to pay for in a different class, which requires a higher copay, or lower percent of price coverage, or both. Seems that would be the better way to go. “So, you want geezer pill B, instead of geezer pill A? OK, but that is going to cost you a lot more”.

But then, the Constitution does give Congress the power to levy taxes. The government taxes people at different rates whether they have dependents, or not. The government taxes people at different rates, depending on where their income comes from. So, maybe there is a precedent for companies that refuse to negotiate a price, and insist on gouging the daylights out of people.



The case is not a criminal case. The Fifth Amendment only maintains to criminal cases.

The First Amendment does not mention drug makers. As for freedom of speech that is political. This is a civil matter not a political matter.

I guess Merck hired some cheapo lawyers.

Merck hired incompetent management–because the company will spend a lot of money–and then lose.

“The legislature may take private property directly by passing an Act transferring title to the government. The property owner may then seek compensation by suing in the U.S. Court of Federal Claims… The Fifth Amendment did not create the national government’s right to use the eminent domain power, it simply limited it to public use.”

Medicare section D is public use. As opposed to private socialism for the rich by the rest of us.

Nice addition but still…

Of course, that “public use” limitation is in tatters. We have seen plenty of use of eminent domain to seize private property, so it can be made available to “JCs” for their private use.


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What world do you live in?

No so. Even Wiki tells us that:
“Like the Fourteenth Amendment, the Fifth Amendment includes a due process clause stating that no person shall “be deprived of life, liberty, or property, without due process of law”. The Fifth Amendment’s Due Process Clause applies to the federal government, while the Fourteenth Amendment’s Due Process Clause applies to state governments. The Supreme Court has interpreted the Fifth Amendment’s Due Process Clause to provide two main protections: procedural due process, which requires government officials to follow fair procedures before depriving a person of life, liberty, or property, and substantive due process, which protects certain fundamental rights from government interference. The Supreme Court has also held that the Due Process Clause contains a prohibition against vague laws and an implied equal protection requirement similar to the Fourteenth Amendment’s Equal Protection Clause”.

Due Process:
Although the Fifth Amendment Due Process Clause is brief, important parts of the Supreme Court’s constitutional doctrine rest on it. At the most general level, the clause reiterates the principle of the rule of law: the government must act in accordance with legal rules and not contrary to them. A more specific application of the Clause is the doctrine today called “procedural due process,” which concerns the fairness and lawfulness of decision making methods used by the courts and the executive.


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Is it Merk’s property?

You are right about the Fifth Amendment but are future sales Merk’s property?

The money is your property. But a sale to you is not Merk’s property.

Property rights? The right to gouge customers? There are strict laws against gouging customers.

The right to charge the government without negotiations? There is no such thing as a right. There are no property rights to no negotiations of prices.

Where did you get that the Fifth Amendment applies at all?

Cheapo lawyers!! Bull Blankers!!

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