Janssen, the pharmaceutical arm of Johnson & Johnson, filed a lawsuit against the U.S. government on Tuesday, joining others trying to prevent a program that allows Medicare the power to negotiate lower drug prices.
The lawsuit, filed in the U.S. District Court for the District of New Jersey, argues that the Medicare drug price negotiation program mandated by President Joe Biden’s Inflation Reduction Act (IRA) will cut profits and hinder the development of groundbreaking treatments.
The lawsuit argues that the IRA undermines the U.S. innovation ecosystem, supported by federal law for decades.
“The second is the operation of free-market forces to establish prices for medicines during and after their patent terms. Together, these components strongly encourage risk-taking and innovation to facilitate future breakthroughs. As a result of that system, patients have faster and broader access to pioneering treatments in the United States than in any other country.”
To address the high cost of prescription medicines in the United States, the Biden administration aims to save $25 billion annually by 2031 by having Medicare negotiate prices for some of the most expensive medicines used by beneficiaries aged 65 and older.
In September, the U.S. Centers for Medicare and Medicaid Services (CMS) is expected to choose the initial 10 drugs for negotiation, with the agreed-upon prices scheduled to be implemented in 2026.
Janssen’s lawsuit also argues that the IRA is unconstitutional and would leave Janssen with no alternative but to withdraw all its products from Medicare and Medicaid to avoid the negotiations. The company argues that the law infringes on Janssen’s First Amendment rights by compelling the company to make false statements and agree to a price it deems unfair.
The lawsuit seeks a declaration from the court to render any forced agreements Janssen may be required to sign null and void.
The company claims in its lawsuit that the provision “is the legal equivalent of a gun to the head” because it forces manufacturers to relinquish access to nearly 40 percent of the U.S. health care market.
“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 wrote.
Additionally, the company aims to prevent the Department of Health and Human Services (HHS) from compelling Janssen to enter into the manufacturer agreement.
The HHS is expected to disclose the first 10 high-cost Medicare drugs subject to negotiation in early September. Negotiations are set to commence in February 2024, with the announcement of maximum negotiated prices scheduled for September 2024.
Among the drugs that Janssen has specifically identified as potential negotiation candidates is the blood thinner Xarelto. The Journal of Managed Care & Specialty Pharmacy has also listed Janssen’s antipsychotic medication Invega Sustenna and diabetes drug Invokana as possible candidates.
This legal challenge by J&J follows similar actions by other pharmaceutical companies, including Merck, Bristol Myers Squibb, and the trade group PhRMA, as well as the U.S. Chamber of Commerce. These entities have each taken their respective disputes with the law to different courts.
