Merck Sues Over Law Empowering Medicare to Negotiate With Drugmakers

[GMDino]

14.5 billion in profits just isn't enough to "Take risks" when they may have to negotiate a few different drugs after a few years on the market.

Maybe capitalism is unconstitutional?  

I mean if we can't over price cancer drugs are we even America?

https://www.nytimes.com/2023/06/06/business/merck-medicare-drug-prices.html?smtyp=cur&smid=tw-nytimes

Quote:[color=var(--color-content-secondary,#363636)]The company is heavily reliant on a cancer drug that could be targeted by a program intended to lower drug prices.[/color]

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[color=var(--color-content-quaternary,#727272)]Merck sued the federal government over its Medicare-negotiation program, claiming it is unconstitutional.Credit...Christopher Occhicone/Bloomberg


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[color=var(--color-content-secondary,#363636)]By Rebecca Robbins[/color]
[color=var(--color-content-secondary,#363636)]June 6, 2023Updated 2:41 p.m. ET[/color]
[color=var(--color-content-secondary,#363636)]The pharmaceutical company Merck sued the government on Tuesday over a federal law that empowers Medicare for the first time to negotiate prices directly with drugmakers.[/color]

[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]Merck’s lawsuit, filed in federal court in Washington, is the drug industry’s most significant move so far to fight back against a substantial change to health policy, which will go into effect in 2026. Democrats pushed through the Medicare-negotiation program last summer as a provision of the Inflation Reduction Act, framing it as a way of lowering drug prices.[/color][/color]

[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]Only some drugs will be subject to negotiation with Medicare and only after they have been on the market without competition for years. But Merck, which generated $14.5 billion in profit last year, claimed in a statement on Tuesday that the law would stifle the ability of it and its peers to make risky investments in new cures.[/color][/color]

[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]Other drug companies have suggested that they will choose to cut certain drug development programs because of the projected dent to their revenue. Several have already said they were reassessing their research plans.[/color][/color]


[color=var(--color-content-secondary,#363636)]Merck said it was seeking a court order or another legal remedy that could exempt Merck from having to participate in the negotiation program.

[color=var(--color-content-secondary,#363636)]Health Care in the United States[/color]

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• Cutting Off Patients: Doctors at the Allina Health System, a wealthy nonprofit in the Midwest, aren’t allowed to see poor patients or children with too many unpaid medical bills.
• Losing Medicaid Access: Since a pandemic-era policy preserving access to the program expired, hundreds of thousands of Americans have lost coverage — even some who still qualify.
• A Scarcity of Medications: Drug shortages in the United States are approaching record levels, with thousands of patients facing delays in getting treatments for cancer and other life-threatening diseases.
• Preventive Care: A federal appeals court temporarily blocked a lower court decision that overturned the Affordable Care Act’s requirement that all health plans fully cover certain preventive health services.
  

[color=var(--color-content-secondary,#363636)]Xavier Becerra, the secretary of health and human services, said in a statement that the Biden administration would “vigorously defend” the law. “The law is on our side,” he said.

[color=var(--color-content-secondary,#363636)]In the complaint filed on Tuesday, Merck’s lawyers at the law firm Jones Day claim that the Medicare-negotiation program is unconstitutional. They say the program would coerce Merck to provide its products at government-set prices, violating a clause of the Fifth Amendment that prohibits the government from taking private property for public use without just compensation. They also claim that the program would violate Merck’s free-speech rights by coercing the company to sign an agreement it did not agree with upon the conclusion of the negotiation.[/color]

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[color=var(--color-content-secondary,#363636)]But several experts who study the industry said the constitutionality arguments were weak and would face an uphill battle in court.[/color]

[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]“What Merck argues is ‘coercion’ is actually the establishment of a freer, more rational marketplace” that will address a crucial root cause of high drug prices, said Dr. Ameet Sarpatwari, an expert in pharmaceutical policy at Harvard Medical School.[/color][/color]


[color=var(--color-content-secondary,#363636)]Experts noted that the negotiation process gave drugmakers leeway to reject Medicare’s final offer and walk away without a deal if they were not happy, subject to a tax. But Merck’s lawsuit said that for one of the company’s drugs, the tax for refusing an offer could amount to tens of millions of dollars on the first day and rise to hundreds of millions daily after a few months.

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[color=var(--color-content-secondary,#363636)]In September, the government plans to announce the first 10 drugs that will be subject to negotiation in 2026. A widely used Merck drug for diabetes, Januvia, is likely to be on that list.[/color]

[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]The program could also affect Merck’s long-term plans for its golden goose, the blockbuster cancer drug Keytruda. It could be among the first products targeted when negotiations begin in 2028 on drugs administered in a health care setting.[/color][/color]


[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]The current version of Keytruda, administered as an infusion, will face its first competition that same year, so its sales are expected to erode regardless of whether the program targets it. But Merck had been expecting to bring in significant revenue from a new formulation of Keytruda it is developing that can be more easily given under the skin. That could be subject to negotiation, too, under the government’s plans for the program.[/color][/color]
[color=var(--color-content-secondary,#363636)][color=var(--color-content-secondary,#363636)]Sheryl Gay Stolberg contributed reporting.[/color][/color]

[color=var(--color-content-secondary,#363636)]Rebecca Robbins is a business reporter covering the pharmaceutical industry. She joined The Times in 2020 and has been reporting on health and medicine since 2015. More about Rebecca Robbins[/color]

[*michaelsean*]

I would think most companies would have an issue being forced to lower the price of their product. I’m not saying it’s right or wrong for the government to do it, but I’m not going to blame the company.

[SunsetBengal]

Time for Europe and other advanced Nations to start footing their part of the bill for all of the "research and development" costs..

[*Nately120*]

(06-06-2023, 10:00 PM)SunsetBengal Wrote: Time for Europe and other advanced Nations to start footing their part of the bill for all of the "research and development" costs..

They're going to have to take the torch eventually, seeing as education in the USA is either being demonized and dismantled or used to sexually groom and indoctrinate kids depending on which side you listen to...either way, we ain't making smart kids no more.

[SunsetBengal]

(06-06-2023, 10:22 PM)Nately120 Wrote: They're going to have to take the torch eventually, seeing as education in the USA is either being demonized and dismantled or used to sexually groom and indoctrinate kids depending on which side you listen to...either way, we ain't making smart kids no more.

In large part due to the number of families with two working parents, or in single parent homes parent working two jobs.  I blame the sexual revolution, birth control and welfare for this catastrophe.

[*Nately120*]

(06-06-2023, 10:28 PM)SunsetBengal Wrote: In large part due to the number of families with two working parents, or in single parent homes parent working two jobs.  I blame the sexual revolution, birth control and welfare for this catastrophe.

I'll have you know that I grew up in a stable two-parent Catholic household that never took in a dime of welfare and I haven't developed a single damn drug.

[Dill]

(06-06-2023, 10:28 PM)SunsetBengal Wrote: In large part due to the number of families with two working parents, or in single parent homes parent working two jobs.  I blame the sexual revolution, birth control and welfare for this catastrophe.

What causes families with two working parents and single parent homes etc.? 

[*michaelsean*]

(06-06-2023, 11:02 PM)Dill Wrote: What causes families with two working parents and single parent homes etc.? 

Women wanting to work? All the stuff we want?

[Dill]

(06-06-2023, 07:52 PM)GMDino Wrote: 14.5 billion in profits just isn't enough to "Take risks" when they may have to negotiate a few different drugs after a few years on the market.

Maybe capitalism is unconstitutional?  

I mean if we can't over price cancer drugs are we even America?

https://www.nytimes.com/2023/06/06/business/merck-medicare-drug-prices.html?smtyp=cur&smid=tw-nytimes

Jeezus. Trying to incentivize big pharma to research "unprofitable" drugs for rare diseases has been a problem for some time.

Now they are threatening to curtail research into those areas that already required government incentives/subsidies?

This sounds very much like MercK et al. are trying to protect near monopoly conditions in which they fleece the public twice--first in their reliance on innovation whose costs are born by small companies and socialized research in gov. and university labs, and then when they market the end product which they have "branded."  Add to the large number of new "patents" they file which merely tweak existing innovations to keep control over their production and sale. 

Finally "big government" will start negotiating Medicare prices instead paying whatever Big Pharma wants. What a shock when we get a president who sides with the consumer rather than corporate profit margins.

Two thirds of drug innovations nowdays come from university and gov. funded labs. E.g., COVID vaccines:
https://www.scientificamerican.com/article/for-billion-dollar-covid-vaccines-basic-government-funded-science-laid-the-groundwork/

The graph in this article shows how the proportion of marketing expenses to research looked 8 years ago:

https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/

[Dill]

(06-06-2023, 11:05 PM)michaelsean Wrote: Women wanting to work?  All the stuff we want?

People want more stuff now than in the 40s or 50s? 

Women's equality has advanced, yes: they have careers now, or at least greater economic independence.

--and yet the real income of the lower three quintiles of household income--the vast majority of American families--has flatlined or dropped since 1965, when most families had only one parent working.
https://www.advisorperspectives.com/dshort/updates/2021/10/25/updated-u-s-household-incomes-a-50-year-perspective

Can't buy more stuff if it takes two to earn what one used to earn.

Anyway, this widening wealth gap is also one consequence of the increased portion of their income that Americans have to pay for healthcare costs, drugs being a big chunk of that. And those high costs which keep the real value of working and middle class income flat are redirected upward to keep the real income of the top quintiles rising. Getting women back in the home won't fix that.

[*Nately120*]

(06-06-2023, 11:05 PM)michaelsean Wrote: Women wanting to work?  All the stuff we want?

Lord knows when my mom started working it was so we could trade in our Chevy for a Cadillac-ak-ak-ak-ak-ak! 

[*michaelsean*]

(06-07-2023, 12:16 AM)Dill Wrote: People want more stuff now than in the 40s or 50s? 

Women's equality has advanced, yes: they have careers now, or at least greater economic independence.

--and yet the real income of the lower three quintiles of household income--the vast majority of American families--has flatlined or dropped since 1965, when most families had only one parent working.
https://www.advisorperspectives.com/dshort/updates/2021/10/25/updated-u-s-household-incomes-a-50-year-perspective

Can't buy more stuff if it takes two to earn what one used to earn.

Anyway, this widening wealth gap is also one consequence of the increased portion of their income that Americans have to pay for healthcare costs, drugs being a big chunk of that. And those high costs which keep the real value of working and middle class income flat are redirected upward to keep the real income of the top quintiles rising. Getting women back in the home won't fix that.

Uhh yeah.  

[GMDino]

(06-07-2023, 12:16 AM)Dill Wrote: People want more stuff now than in the 40s or 50s? 

Women's equality has advanced, yes: they have careers now, or at least greater economic independence.

--and yet the real income of the lower three quintiles of household income--the vast majority of American families--has flatlined or dropped since 1965, when most families had only one parent working.
https://www.advisorperspectives.com/dshort/updates/2021/10/25/updated-u-s-household-incomes-a-50-year-perspective

Can't buy more stuff if it takes two to earn what one used to earn.

Anyway, this widening wealth gap is also one consequence of the increased portion of their income that Americans have to pay for healthcare costs, drugs being a big chunk of that. And those high costs which keep the real value of working and middle class income flat are redirected upward to keep the real income of the top quintiles rising. Getting women back in the home won't fix that.

We're a *bit* off track of the discussion of drug prices.

But we can't forget the knife that old St. Ronnie Reagan took to the middle class.  

My parents were a single working household.  Mom stayed home.  Two kids through Catholic school and college.  But most of that after 1983 was thanks to my dad willing to work any job he could find after the plant broke the union and closed the building to "save money".

The destruction of the middle class and the increasing greed of the large companies over the last 40 years has more to do with the price of things than "people want more stuff".

Merck is not going to lose money because of this.  They will make slightly less money.  And all for the good of the people who need the drugs.  

And I don't consider cancer drugs under the umbrella of wanting to "buy more stuff" when it comes to things they need to afford.

[Dill]

(06-07-2023, 09:41 AM)GMDino Wrote: And I don't consider cancer drugs under the umbrella of wanting to "buy more stuff" when it comes to things they need to afford.

"Wanting more stuff" was M's answer to the question of why, now, so many families have two bread winners; I don't think he classed drugs with "stuff."

I think he wasn't impressed with my framing of the issue in economic terms, with the earning power of families remaining static even with both spouses working. Though the economy has been more productive, a greater share of that value now, proportionally, flows to that top quintile, concentrating wealth at the top.

I don't see recognizing that as "off track" when we are discussing the obscene cost of drugs now, and government efforts to reign them in. Gov. became, in part, the problem when Bush cut negotiation, from the gov. side, out of Big Pharma drug sales to the largest customer in the world--Medicare. 

That looks like corporate "capture" of government, which makes people angry at government and more likely to elect politicians who think less government will be better than good government. 

As the more and more people buy the notion that government is bad, that gives big business a freer rein to do what it wants "freed" from oversight and regulation. 

Also, many people think of drug companies as service- rather than profit-focused, and think of them as the main drivers of research, as opposed to small companies and (often) publicly funded universities. Big companies frequently buy little ones once they have produced something ready for testing and marketing. And public university research is funded by taxpayers--though now we see "partnerships" with corporations which socialize the cost of research--but often not the patents and profits. If you are running Pfizer or Merck or other behemoths, your goal is to harvest profit wherever you can. That can mean doing your own research, or just waiting for some other small company or university to get the ball rolling and then buy in to acquire patents and profits. 

But it largely means charging high prices for drugs to captive customers and telling people it's to recoup research rather than marketing costs. 

[CKwi88]

This is America. You can't not let companies screw over the little guy. Just look at the Cali thread.

[GMDino]

(06-07-2023, 02:36 PM)Dill Wrote: "Wanting more stuff" was M's answer to the question of why, now, so many families have two bread winners; I don't think he classed drugs with "stuff."

I think he wasn't impressed with my framing of the issue in economic terms, with the earning power of families remaining static even with both spouses working. Though the economy has been more productive, a greater share of that value now, proportionally, flows to that top quintile, concentrating wealth at the top.

I don't see recognizing that as "off track" when we are discussing the obscene cost of drugs now, and government efforts to reign them in. Gov. became, in part, the problem when Bush cut negotiation, from the gov. side, out of Big Pharma drug sales to the largest customer in the world--Medicare. 

That looks like corporate "capture" of government, which makes people angry at government and more likely to elect politicians who think less government will be better than good government. 

As the more and more people buy the notion that government is bad, that gives big business a freer rein to do what it wants "freed" from oversight and regulation. 

Also, many people think of drug companies as service- rather than profit-focused, and think of them as the main drivers of research, as opposed to small companies and (often) publicly funded universities. Big companies frequently buy little ones once they have produced something ready for testing and marketing. And public university research is funded by taxpayers--though now we see "partnerships" with corporations which socialize the cost of research--but often not the patents and profits. If you are running Pfizer or Merck or other behemoths, your goal is to harvest profit wherever you can. That can mean doing your own research, or just waiting for some other small company or university to get the ball rolling and then buy in to acquire patents and profits. 

But it largely means charging high prices for drugs to captive customers and telling people it's to recoup research rather than marketing costs. 

To be clear I wasn't implying or saying at all that is what he meant.  Just that no matter what the desire is to buy more stuff this is a separate issue about things we should have to worry about affording.

[*pally*]

I have severe rheumatoid arthritis. One of my monthly medications, retail cost, at Costco is $11,300. I am lucky (?) that I have insurance so I only pay $360/month after I pay over $3000 in deductibles.

In Canada the monthly cost of the medication is $1780.

It costs 10x as much to purchase the same medication in the US as it does in Canada

I don't care how many people are working in the household...that is asinine

[Dill]

(06-07-2023, 05:40 PM)pally Wrote: I have severe rheumatoid arthritis.  One of my monthly medications, retail cost, at Costco is $11,300.  I am lucky (?) that I have insurance so I only pay $360/month after I pay over $3000 in deductibles.

In Canada the monthly cost of the medication is $1780.

It costs 10x as much to purchase the same medication in the US as it does in Canada

I don't care how many people are working in the household...that is asinine

Also profitable. Don't want government telling businesses what to charge, do you? 

That's communism!

[*michaelsean*]

(06-07-2023, 08:32 PM)Dill Wrote: Also profitable. Don't want government telling businesses what to charge, do you? 

That's communism!

But we act outraged that the company opposes this action. Any company would oppose it.

[*pally*]

(06-07-2023, 08:32 PM)Dill Wrote: Also profitable. Don't want government telling businesses what to charge, do you? 

That's communism!

The government negotiates contracts hundreds if not thousands times a day, including Medicare provided services. Why should drug companies doing business with Medicare be exempt is the question?