Johnson & Johnson sued to stop the U.S. government from empowering Health and Human Services (HHS) to negotiate lower drug prices for Medicare recipients.
The major drugmaker became the third player in the industry attempting to halt the Medicare drug-price negotiations established by the Inflation Reduction Act (IRA), in a claim filed in the U.S. District Court in Trenton, New Jersey.The IRA, which narrowly passed in 2022 via the then Democrat-controlled House and Senate, gave Medicare the power to negotiate drug prices for the first time in its six decade history.
Pharmaceutical companies claim that the new drug price-negotiation program will also force drugmakers to curb research and development of important new treatments, in addition to loss in profits.
J&J said that it aims to stop the “innovation-damaging congressional overreach that threatens the United States’ primacy in developing transformative therapies and in patients’ access to those treatments.”Medicare Can Force Drug Companies to Lower Prices on Some Products
The Biden administration hopes to save $25 billion annually by 2031 by having Medicare negotiate prices for some of the more expensive medications used by those who are 65 and older.
Americans pay more for prescription medicines than citizens of any other country.The Centers for Medicare and Medicaid Services (CMS), which is under the HHS, is expected to select in early September the first 10 high-cost drugs covered my Medicare that will be subject to negotiations with manufacturers.
Discussions will begin in February 2024, and the maximum negotiated prices will be announced in September 2024.
The companies that make those 10 expensive drugs face an October deadline to sign agreements to participate in those negotiations.
“As the secretary has already made clear, we will vigorously defend the president’s drug price negotiation law, which is already helping to lower health care costs for seniors and people with disabilities. The law is on our side,” a spokesperson for HHS said in a statement.
J&J Joins Other Big Pharma Giants in Stopping New Provision
Bristol Myers Squibb and Merck & Co., as well as the U.S. Chamber of Commerce and the industry lobby group the Pharmaceutical Research and Manufacturers of America, have already filed a suit against the Biden administration over the plan.The Chamber of Commerce has also sought an injunction to stop the IRA’s implementation of the drug-price regulations.
J&J’s court filing is expected to drive up the probability that conflicting legal rulings over the IRA’s drug price provisions could prompt the U.S. Supreme Court to review the matter.
The pharmaceutical giant says that the Medicare negotiations violate the First and Fifth amendments of the U.S. Constitution.
The lawsuit argued that compelling the company to make statements it believes are false and misleading, including stating that prices set under the program are fair, is unconstitutional.
J&J Argues That Constitutional Rights Are Being Violated by New Law
Meanwhile, J&J’s pharmaceutical unit Janssen argued that the program is unconstitutional and amounts to “confiscation of constitutionally protected property.”
“The government is forcing Janssen to provide its innovative, patented medicines on pricing terms that by law must be significantly below market prices,” the company said in a statement.
The drugmaker specifically named Janssen’s blood thinner Xarelto as one of the drugs facing potential negotiations, as it is among the 10 most widely reimbursed drugs for Medicare Part D patients.The pharmaceutical company earned $2.47 billion in revenue from Xarelto in 2022.
J&J argued that Medicare negotiations “inflict an uncompensated physical taking” of its product by mandating access to Xarelto on terms solely set by the government, which the company said it “would never voluntarily” agree to.
“That provision is the legal equivalent of a gun to the head because it would require the manufacturer to give up access to nearly 40 percent of the U.S. health care market,” the company wrote regarding the IRA rule.
“It is akin to the government taking your car on terms that you would never voluntarily accept and threatening to also take your house if you do not ‘agree’ that the taking was ‘fair.”
The company believes the provision does not involve true negotiations since the government “unilaterally dictates” drug prices and said that real negotiations involve finding a way for both parties to freely agree on terms.
“While the government may choose to deceptively describe the program as involving an ‘agreement’ to ‘negotiate’ a ‘fair’ price, it cannot force manufacturers to echo its misleading messaging,” J&J said in the complaint.
Janssen’s antipsychotic medication Invega Sustenna and diabetes drug Invokana have also been named as possible candidates, according to a study in the Journal of Managed Care & Specialty Pharmacy.
J&J said that the law leaves Janssen with no choice but to withdraw all of its products from Medicare and Medicaid if it wants to avoid the negotiations.
The firm is asking the court to declare any agreements Janssen may be forced to sign as null and void and to block the HHS from forcing its subsidiary from signing the manufacturer agreement.
