Johnson & Johnson (NYSE:JNJ) is suing the US government in a bid to block a program that would give the government health insurance program Medicare the ability to negotiate for lower drug prices.
J&J is the latest major drugmaker to sue the Biden administration, joining Merck and Bristol Myers Squibb. The lobbyist group Pharmaceutical Research and Manufacturers of America have have also sued, and the Chamber of Commerce has sought an injunction to stop its implementation.
Medicare’s power to negotiate drug prices would begin on September 1 thanks to the Inflation Reduction Act, which passed in August 2022. Negotiations would begin with 10 drugs chosen by the US Centers for Medicare and Medicaid Services, and the agreed prices would go into effect starting in 2026.
The White House hopes the program will save Americans over the age of 65 $25 billion annually by 2031.
However, the pharmaceutical companies argue the program would be a drag on profits and ultimately slow the development of potentially groundbreaking drugs.
J&J’s suit, filed in the US District Court of New Jersey, states that the program is an unconstitutional confiscation of protected property. It also says the law violates the first amendment by compelling drugmakers to make false statements, i.e. that the negotiated prices are fair.
"The government is forcing Janssen to provide its innovative, patented medicines on pricing terms that by law must be significantly below market prices," the company said in a statement.
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