BMS joins Merck in challenge to Medicare price negotiation

Bristol-Myers Squibb has filed a lawsuit against the US government that aims to block the drug price negotiation elements of the Inflation Reduction Act (IRA), joining fellow plaintiffs Merck & Co and the US Chamber of Commerce.

BMS’ complaint covers much the same ground as the others, claiming that the legislation violates the First and Fifth Amendments of the US Constitution.

The arguments of all three are almost identical. BMS’ suit maintains that the legislation does not “empower” Medicare to negotiate prices, nor does it result in any “agreements” between Medicare and pharma companies.

Rather, it creates “an unprecedented regime whereby the Secretary of the US Department of Health and Human Services (HHS) dictates a price at which pharmaceutical companies are compelled to sell their most innovative and successful medicines or else face unconscionable penalties,” according to court documents.

That violates the Fifth Amendment, which includes provisions that require the federal government to pay fairly for a private asset acquired for public use, according to BMS’ counsel.

In addition, “instead of simply directing the companies on what they must do, the IRA uses the threat of penalties to coerce the companies to say they agree to do it all voluntarily,” and under the First Amendment “the government cannot conscript citizens (including businesses) to parrot its preferred political messaging.”

The complaint takes issue with the IRA’s enforcement of mandates through monetary fines and penalties and not conditions on receipt of federal reimbursements. It also slams the proviso that manufacturers cannot withdraw from Medicare or Medicaid without giving notice up to two years in advance – meaning that once a medicine is selected it is too late to exit.

A Reuters report suggests that BMS has a lot to lose if the Medicare negotiation principles remain unchallenged, as analysts think its $12.5 billion anticoagulant drug Eliquis (apixaban) – partnered with Pfizer – will be among the first list of drugs due to be selected in September for negotiating prices that would take effect in 2026.

BMS’ lawsuit has been filed in New Jersey, while Merck is challenging the IRA in Columbia and the Chamber of Commerce’s suit is in Ohio. Biogen has also intimated that it may also sue the government over the issue.

The IRA was enacted last year and requires Medicare – the government-run insurance programme for older Americans – to negotiate prices of a selected group of medicines with pharmaceutical companies, something it has not been allowed to do in the past.

Under the legislation, the Secretary of Health and Human Services will be able to negotiate the prices of selected drugs with a “high budget impact” provided via Medicare Parts B and D, starting in 2026.

In a statement, BMS said it has serious concerns about the impact the Medicare negotiation programme will have on R&D, claiming it has “changed the way we look at our development programmes in oncology and beyond, whether it’s a decision to advance a new medicine or pursue additional indications for an existing one.”