On Tuesday, pharmaceutical giant Johnson & Johnson (J&J) filed a lawsuit against the U.S. government, marking a new escalation in the ongoing battle over drug pricing. According to a report by Reuters, the lawsuit is the latest attempt by a drug manufacturer to prevent a program that empowers the Medicare government health insurance plan to negotiate lower drug prices.
The pharmaceutical sector has been vocal about its concerns regarding the drug pricing negotiation program, part of President Joe Biden’s signature Inflation Reduction Act. The industry fears that the program could lead to reduced profits and discourage drugmakers from developing innovative new treatments. According to a report by CNBC, the Biden administration remains hopeful that the program could save $25 billion annually by 2031. This would be achieved by allowing Medicare to negotiate prices for some of the most expensive medicines used by beneficiaries aged 65 and over.
Alongside J&J, other major U.S. drug manufacturers such as Bristol Myers Squibb and Merck & Co have launched similar legal actions against the government over this plan, in addition to organizations like the U.S. Chamber of Commerce and industry lobby group the Pharmaceutical Research and Manufacturers of America.
Despite these legal actions, the government remains steadfast in its commitment to the new law. A spokesperson for the U.S. Department of Health and Human Services (HHS) affirmed the government’s stance, stating, “The law is on our side.” The statement also underscored the law’s projected impact on reducing healthcare costs for seniors and people with disabilities.
The J&J Argument
In its lawsuit, J&J contends that the program is unconstitutional, describing it as a “confiscation of constitutionally protected property.” They argue that the law compels the company to provide its innovative, patented medicines at prices significantly below market rates. Furthermore, J&J believes the law infringes on its First Amendment rights by obligating the company to make statements it considers false and misleading, such as agreeing that the prices set under the program are fair.
Impact on the Pharmaceutical Industry
This legal action by J&J and other pharmaceutical companies signals a significant conflict between the industry and the government over control of drug prices. The outcome of this legal battle could have far-reaching implications for the future of the pharmaceutical industry and healthcare costs in the United States. For many Americans, the hope is that these measures will lead to lower prescription drug costs, as per the intentions of the Biden administration.