Merck Files Lawsuit Against Federal Government

Merck has filed a lawsuit in the US District Courts against the federal government, alleging that the drug pricing clauses of the Inflation Reduction Act (IRA) violate the First and Fifth Amendments to the US Constitution. Although prior judgements raise questions about the First Amendment claim, there are some indications that the Fifth Amendment claim could have potential, says GlobalData, a data and analytics company.

“The judicial response to industry lawsuits on drug pricing regulations have been mixed in the past. Previously, the Pharmaceutical Research and Manufacturers of America (PhRMA) brought a similar claim on First Amendment grounds against California, alleging that requirements for public notification and explanation of drug price increases violated free expression,” notes Jay Patel, pharma analyst at GlobalData. “However, the US District judge sided with the state and dismissed the lawsuit.”

“Should the judge in this case take a similar approach—which is not guaranteed, given that District Court judgements are not binding precedent—the First Amendment claim is likely to fail. However, the IRA goes further than the California legislation with its requirement for drug manufacturers to convey agreement to the federal government’s prices, so an alternative conclusion cannot be ruled out.”

The Fifth Amendment-based strategy in the Merck lawsuit, which has yet to be tested in federal courts, could potentially have a chance of yielding results, according to the data and analytics firm. The Takings Clause of the Fifth Amendment prohibits the government from taking private property for public use without just compensation. The fundamental legal questions are whether the drug patents held by Merck would constitute protected private property and whether this Act would constitute a taking under the Takings Clause, issues that federal appellate courts have yet to address.