Protect Our Care Along with Public Citizen, Senators and Leading Health Care Experts and Advocates File Briefs to Protect Medicare’s Power to Negotiate Lower Drug Prices
With Medicare slated to begin negotiating lower prescription drug prices with big drug companies in the coming weeks, drug companies and their mega lobbying group allies are desperately suing the federal government in an effort to protect their profits by halting the popular program. In one lawsuit, pharmaceutical company Merck has asked the court for a decision on their case without going to trial. In response, leading health care groups have filed briefs to deny the motion and protect the Inflation Reduction Act’s Medicare Drug Price Negotiation Program. Read more about the cases here.
These meritless lawsuits are about one thing: protecting drug companies’ outrageous profits. Merck sells Januvia, a Type 2 diabetes drug that has been selected for negotiation. Januvia has been on the market without competition for 17 years and has grossed Merck $49.9 billion in sales since its launch. In 2021 alone, Medicare spent over $4 billion on the drug with an average of $4,343 per beneficiary while Merck CEO Robert Davis raked in $13.72 million. Since 2010, Medicare has spent nearly $28 billion on the drug.
Medicare drug price negotiation is projected to lower costs for seniors and save taxpayers tens of billions of dollars, but big drug companies are eager to protect their outrageous prices and outsized profits. Drug companies that manufacture drugs that are likely to be eligible or were chosen for negotiation have a history of exploiting the patent system to protect their monopolies and keep competitor drugs off the market, spend millions on lobbying, and increase their list prices at rates that far exceed inflation.
Here are excerpts from the DOJ and health care expert and advocate briefs:
Department of Justice
Federal Government’s Opposition to Plaintiff’s Motion for Summary Judgment, and Cross-Motion: “For More Than 30 Years, Congress Has Imposed Limits on How Much Federal Agencies Pay for Prescription Drugs.” “Manufacturers who wish to sell their drugs to the Department of Defense and the Department of Veterans Affairs do so at statutorily defined ceiling prices, and both agencies have authority to negotiate prices further below those ceilings. […] Like other market systems, the Negotiation Program thus gives a manufacturer a choice: it can sell its products at prices a buyer is willing to pay, or it can take its business elsewhere. […] The IRA’s Negotiation Program is nothing more, and nothing less, than an example of Congress exercising its constitutional authority to control the use of federal funds. Such control fits squarely within the bounds of established precedent.” [Federal Government’s Opposition to Plaintiff’s Motion for Summary Judgment and Cross-Motion, 9/11/23]
Health Care Experts, Organizations, and Advocates
Protect Our Care, Public Citizen, et al.: “Merck’s Takings Clause claim rests on the flawed premise that ‘the whole point of the [IRA] Program is to take prescription drugs without paying their fair value.’” “Merck does not contest that it wants to sell brand-name drugs, including Januvia, to Medicare participants and beneficiaries. It does not contest that it will be paid for purchases of the drug. Instead, Merck argues that Medicare will pay less than the average amount that Merck prefers to charge in the United States – although not necessarily less than the amount that it charges other buyers in the United States or internationally. But Merck is wrong that its desire to impose a high monopolistic price on Medicare, the world’s largest drug purchaser, without negotiations, means that purchase below that price necessarily constitutes an unconstitutional taking.” [Protect Our Care, Public Citizen, et al. Amicus Brief, 9/13/23]
Sens. Amy Klobuchar, Peter Welch, Tammy Baldwin, Richard Blumenthal, Sherrod Brown, Catherine Cortez Masto, Richard J. Durbin, John Fetterman, John Hickenlooper, Jacky Rosen, Jeanne Shaheen, Debbie Stabenow, Chris Van Hollen, And Elizabeth Warren: “Congress Carefully Considered the Competing Interests at Stake in the Program and Struck an Appropriate Balance” “The Program was the culmination of ten years’ work examining the Medicare Part D system and escalating drug costs across the national economy. […] With the benefit of this long history and experience, Congress was fully prepared in 2021 to weigh and debate the negotiation provisions that would eventually win passage as part of the IRA. […] Naturally, Congress also heard from the Program’s opponents—and found their evidence and arguments wanting. […] The legislative record makes clear that Merck has simply repackaged the policy arguments it and its allies unsuccessfully advanced before Congress as constitutional arguments.” [Senators Amicus Brief, 9/19/23]
AARP and AARP Foundation: “Skyrocketing Drug Prices Have Stretched the Budgets of Older Adults to the Point Where They Are Forced to Make Impossible, Life-Altering Choices.” “The goal of the Negotiation Program is to end this public crisis and interject long-overdue fairness, transparency, and predictability into the drug pricing process. While prescription drugs are intended to treat illnesses and improve the quality of life, these benefits are meaningless if beneficiaries cannot afford them. […] Taken together, the IRA’s prescription drug provisions are designed to address high out-of-pocket costs, high taxpayer costs, and high drug prices. […] The other IRA provisions, though critical, cannot accomplish the goal of stopping escalating drug costs without the implementation of the Negotiation Program.” [AARP and AARP Foundation Amicus Brief, 9/18/23]
American Public Health Association et al.: “The Program Is A Vital First Step In Ensuring The Health Of Americans And The Medicare Program.” “Even without changing the price of new drugs, the public health benefits from lower drug prices for drugs that have been on the market for several years are likely to be orders of magnitude greater than the harm caused by this 1% reduction in new drugs: making existing drugs more affordable will enable more patients—especially low-income older people—to actually take and maintain existing necessary medication. […] Where funding for research and development comes from public programs, there is little reason to believe reduction in prices charged by manufacturers will result in substantially reduced effective and impactful innovation.” [American Public Health Association et al. Amicus Brief, 9/18/23]
Economists and Scholars of Health Policy: “The Inflation Reduction Act restores bargaining equity between manufacturers and consumers.” “These combined measures spur innovation and enable companies to recuperate their investment while protecting consumers from a market-wide overinflation of drug prices. The prescription-drug market has tipped in favor of manufacturers for decades, and the Inflation Reduction Act takes important steps to restore its balance.” [Economists and Scholars of Health Policy Amicus Brief, 9/18/23]
Nationally Recognized Healthcare and Medicare Experts: “Such rights do not apply to private parties’ relationships with the federal government.” “The [Drug Price Negotiation Program] is consistent with the federal government’s well-established ability to regulate the prices that the Medicare program pays for services by physicians, hospitals, and other providers. […] In claiming that the [Drug Price Negotiation Program] is an uncompensated taking of property in violation of the Constitution, Merck seeks to relitigate positions repeatedly rejected by courts in response to other challenges brought against federal healthcare programs.” [Nationally Recognized Healthcare and Medicare Experts Amicus Brief, 9/18/23]