Merck sues federal government, calling plan to negotiate Medicare drug prices ‘extortion’

The drugmaker is seeking to halt the program, which was laid out in the Inflation Reduction Act and is expected to save taxpayers billions of dollars in the coming years.

Merck said in a complaint filed Tuesday that the program does not involve genuine negotiation. Instead, it said the U.S. Department of Health and Human Services selects drugs to be included and then dictates the price, threatening drugmakers with “a ruinous daily excise tax” if they decline to agree.

“It is tantamount to extortion,” the drugmaker said in the complaint, which was filed in the U.S. District Court for the District of Columbia.

The drugmaker added that it expects its diabetes treatment Januvia to be part of “the IRA’s scheme” starting later this year.

Representatives of the federal agency did not immediately respond to requests for comment from The Associated Press.

The federal government is expected to soon release rules for negotiating drug prices and then will publish in September a list of 10 drugs that it will start price negotiations on next year.

The plan marks the first time ever that the federal government will bargain directly with drug companies over the price they charge for some of Medicare’s costliest drugs.

Negotiated prices won’t take hold until 2026.

Associated Press writer Amanda Seitz contributed to this report.