Merck Sues Over Medicare Drug-Price Negotiation Law

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.

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.

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.

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.

Sheryl Gay Stolberg contributed reporting.

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