Pharmaceutical Giant Merck Challenges Inflation Reduction Act over Medicare Drug Pricing, Calls It 'Extortion'

Merck & Co Inc MRK has reportedly filed a lawsuit against the U.S. government to halt implementing the Medicare drug price negotiation program outlined in the Inflation Reduction Act (IRA). 

Pfizer Inc's PFE CEO Albert Bourla called U.S. plans to negotiate drug prices for its Medicare health program "negotiation with a gun to your head." 

Bristol Myers Squibb & Co's BMY Eliquis, Pfizer's Ibrance, and AbbVie Inc's ABBV Imbruvica are expected to be among the ten top-selling drugs subject to U.S. price negotiations for 2026.

Merck's lawsuit marks the first challenge by a pharmaceutical manufacturer against this law, Reuters reported, which the industry claims will result in reduced profits and hinder the development of innovative treatments.

The drug pricing reform introduced by the Biden administration aims to achieve annual savings of $25 billion by 2031 through negotiations on drug prices covered by Medicare, the government health plan for individuals aged 65 and over. 

According to the lawsuit, the law would compel drug manufacturers to negotiate drug prices at rates below market value. 

"This is not 'negotiation.' It is tantamount to extortion," Merck said in the suit.

The drugmaker also argues that the law will force companies to sign agreements conceding that the prices are fair, which it claims violates the First Amendment's protections of free speech.

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