- Johnson & Johnson’s pharmaceutical unit joined the battle against a new law designed to lower prescription drug prices, claiming it amounts to confiscation of property.
- Janssen Pharmaceuticals filed suit in the U.S. District Court for New Jersey, following the lead of Bristol Myers Squibb. Merck & Co. and the trade group Pharmaceutical Research and Manufacturers of America, who are also fighting the law, but have filed their lawsuits in different federal venues.
- In keeping with other challenges in the pharmaceutical industry, J&J says its constitutional rights are being violated by the Inflation Reduction Act. For J&J, the issue is particularly pressing. The New Jersey-based company expects its top-selling Xarelto drug to face price negotiations as part of the program that kicks off with an initial target list by Sept. 1.
The U.S. has long been the most lucrative market for pharmaceutical makers, in part because there are no mechanisms such as price negotiations to control the cost of medicines. As a result, Americans pay more than three times as much for brand-name drugs than people in other parts of the world, according to a 2021 Rand Corporation study funded by the U.S. government.
The IRA, passed in 2022, was designed to address that gap by allowing Medicare for the first time to negotiate prices for drugs it covers for senior citizens. The Centers for Medicare and Medicaid Services plan to release a list of the first 10 drugs selected for the negotiation process by Sept. 1. New prices for that group would take effect in 2026.
J&J and other drugmakers claim that the law will actually result in dictated prices and penalties instead of an equitable agreement between the government and a particular company. The result is a violation of the Fifth Amendment, which prohibits taking private property for public use “without just compensation,” J&J argued in its lawsuit.
“Stripped of its misleading labels, the program is a straightforward confiscation of constitutionally protected property,” J&J said. “It is akin to the government taking your car on terms that you would never voluntarily accept and threatening to also take your house if you do not `agree’ that the taking was `fair.’”
J&J also said its First Amendment rights are being violated because the law would coerce the company into saying it’s agreeing with the government on a negotiated “fair” price, which it says isn’t the case. J&J additionally touted the $65.7 billion it has spent since 2016 on research and development, arguing that the law will ultimately harm patients by slowing investment in studies of new and existing drugs.
“It deprives tomorrow’s patients of innovative medicines made possible by protected patent rights and market-based pricing, and the future generics enabled solely by today’s innovator drugs,” J&J said. “And it harms today’s patients by threatening access to existing therapies and eviscerating incentives to continually improve those therapies.”
Astellas Pharma also recently challenged the law in federal court, announcing last week that it had filed a suit against legislation that “is not only bad policy, but unconstitutional.”