Health Care

J&J joins legal fight against Medicare drug price negotiation

The Johnson & Johnson logo appears above a trading post on the floor of the New York Stock Exchange, Monday, July 12, 2021. Johnson & Johnson is suspending sales forecasts for its COVID-19 vaccine only a few months after saying the shot could bring in as much as $3.5 billion this year. The health care giant said Tuesday, April 19, 2022, that a supply surplus and demand uncertainty prompted the move. (AP Photo/Richard Drew, file)

U.S. pharmaceutical company Johnson & Johnson (J&J) announced Tuesday it is suing the Department of Health and Human Services (HHS) over Medicare Drug Price Negotiation Program, becoming the latest of several organizations challenging the provision established by the Inflation Reduction Act.

J&J joins fellow pharmaceutical companies Merck & Co., Bristol Myers Squibb as well as two trade organizations in seeking to block the Medicare Drug Price Negotiation Program. As with the other complaints that have been filed, the company argues the program would stifle medical innovation.

“The IRA breaks the agreement at the heart of the patent and regulatory laws: when companies invest and succeed at developing innovative new treatments, they are awarded time-limited and constitutionally protected rights in their innovation,” J&J said in its release.

The complaint, filed in the District Court of New Jersey, appeared to imply the pharmaceutical company did not view the process established by the IRA as being a “real” negotiation, accusing the federal government of coercion. Other plaintiffs have stated that while they are open to negotiating drug prices, they take issue with how the government plans to carry out talks.

Participation in drug price negotiations is voluntary, though there are costs to not negotiating. Companies who do not want to engage have the option of either facing excise taxes or terminating their relationships with Medicaid, which would mean giving up a highly lucrative income stream.

As with previous suits, J&J argued its constitutional rights were violated by the HHS program, arguing the negotiations would amount to compelled speech. The company asks the court to declare the program to be a violation of constitutional rights and for agreements signed under the program to be declared null and void.

HHS recently revised its guidelines on how it plans to carry out the negotiations in apparent response to the deluge of lawsuits, clarifying what steps will be taken during talks and how companies can avoid excise taxes if they don’t want to discuss drug prices.

Organizations suing to stop negotiations were not reassured by the revisions. One of the plaintiffs, the Chamber of Commerce, filed a motion last week to block the drug price negotiation program from being implemented while it is being hashed out in court.

Negotiations will take place over 2023 and 2024, but the new prices won’t go into effect until 2026. The first 10 drugs eligible for negotiation are set to be announced in September, in less than two months.

Tags drug price negotiation HHS Johnson & Johnson

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