Merck Sues to Stop the IRA’s ‘Extortion’

The drug maker makes a compelling case that the Medicare price-control bill violates the Constitution

WSJ Editorial. Excerpts:

"HHS forces companies to provide drugs to the government at its dictated prices. The agency selects drugs to negotiate and then compels manufacturers to sign an “agreement” promising to sell their products at whatever “fair” price Medicare decides. The agency could demand Merck sell its drugs at a 90% loss, and the drug maker couldn’t refuse."

"Manufacturers that don’t participate in the negotiations or reject the government’s prices incur a crippling daily excise tax that starts at 186% and eventually climbs to 1,900% of the drug’s daily revenues."

"Non-compliance would be so ruinous that Congress projected the excise tax would raise no revenue."

"Even in Europe, drug makers can refuse to sell products to national health systems if the price is too low."

"The lawsuit cites the Supreme Court’s Horne (2015) decision, which held that a Department of Agriculture program requiring raisin farmers to turn over a portion of their crop to the government was a per se taking. So is the IRA’s regime, which similarly compels manufacturers to surrender their drugs without just compensation."

"The Centers for Medicare and Medicaid Services this year barred manufacturers from disclosing “to the public any information in the initial offer or any subsequent offer by CMS, the ceiling price contained in any offer [or] . . . any information exchanged verbally during the negotiation period.”"