Johnson & Johnson Sues HHS Over Medicare Drug Price Negotiation Program

Johnson & Johnson (J&J) has filed a lawsuit against the Department of Health and Human Services or HHS over the Medicare Drug Price Negotiation Program.

The company joins other pharmaceutical firms, including Merck & Co. and Bristol Myers Squibb, as well as two trade organizations in challenging the provision established by the Inflation Reduction Act. J&J argues that the program would stifle medical innovation.

In its release, J&J stated that the Inflation Reduction Act breaks the agreement at the core of patent and regulatory laws. The company believes that when pharmaceutical companies invest in and succeed in developing innovative treatments, they should be granted time-limited and constitutionally protected rights to their innovations. The complaint, filed in the District Court of New Jersey, suggests that J&J does not view the negotiation process established by the act as genuine, accusing the federal government of coercion. Other plaintiffs have also expressed concerns about how the government intends to conduct the talks, although they are open to negotiating drug prices.

While participation in drug price negotiations is voluntary, there are consequences for companies that choose not to engage. These companies face the option of paying excise taxes or terminating their relationships with Medicaid, which would mean forfeiting a highly profitable income stream.

J&J, along with other plaintiffs, argues that the HHS program violates their constitutional rights by compelling speech during the negotiations. The company is seeking a court declaration that the program is unconstitutional and that agreements signed under the program should be deemed null and void.

HHS recently revised its guidelines on the negotiation process in response to the lawsuits. The revisions clarify the steps that will be taken during talks and provide options for companies to avoid excise taxes if they choose not to discuss drug prices. However, the organizations suing to stop the negotiations were not reassured by these revisions. The U.S. Chamber of Commerce, one of the plaintiffs, filed a motion last week to block the implementation of the drug price negotiation program while the case is being resolved in court.

Negotiations are scheduled to take place between 2023 and 2024, with the new prices becoming effective in 2026. The first ten drugs eligible for negotiation will be announced in September, less than two months away.

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