Analysis by Rachel Roubein with research by McKenzie Beard; The Washington Post
Bernie Sanders urges HHS to take action on the price of Alzheimer’s drug.
Sen. Bernie Sanders (I-Vt.) is pressing the federal health department to take action on the price of an Alzheimer’s drug. A federal appeals court seemed skeptical of a nationwide pause on Obamacare’s no-cost preventive service mandate. But first…
The drug industry waged a multimillion dollar lobbying campaign aimed at killing Democrats’ efforts to allow Medicare to negotiate drug prices for the first time.
But last summer, pharma lost. And that’s not something that happens often in Washington.
So now, at least one company — Merck — has taken the battle to court. The move thrusts a central plank of President Biden’s Inflation Reduction Act aimed at lowering drug prices for millions of seniors into legal uncertainty.
Some legal analysts say to expect more lawsuits from drugmakers who allege the policy will thwart the development of innovative new therapies. And several said they’re skeptical the lawsuit, which Merck vowed to take all the way to the Supreme Court if needed, will survive.
But the move has strategic merit for the company, even though the case is “pretty weak,” said Ameet Sarpatwari, an assistant professor of medicine at Harvard Medical School.
- “If they can buy themselves some more time with their drug on the market at its monopoly-like price, that may make everything worthwhile” for the company, he said.
Medicare hasn’t begun negotiating the price of prescription drugs, with the federal health program slated to announce by Sept. 1 which 10 high-cost drugs will be the first ones subject to negotiation. The new maximum price of the medicines will take effect in 2026.
The drug industry has made veiled threats of filing lawsuits over the new law since it was passed in August. Merck is the first to do so, blasting the notion of Medicare price negotiation as a “political Kabuki theater” and “tantamount to extortion.”
Follow the money: In the lawsuit, the company wrote that it expects Januvia, a drug used to treat Type 2 diabetes, to be included in the first round of negotiation with two other drugs — diabetes drug Janumet and cancer therapy Keytruda — following suit in later years. The two diabetes drugs earned $4.5 billion in combined sales last year, and Keytruda had sales of nearly $21 billion, our colleagues Christopher Rowland and Tony Romm note.
Merck hinged its claims on two constitutional amendments. The company argues the rules force Merck to agree to the price HHS sets and thus violates its free speech rights. Merck also alleges the program violates the Fifth Amendment’s requirement that the government pay “just compensation” when taking private property.
- When it comes to the Fifth Amendment, key issues in this area of law are “undecided,” Robin Feldman, a professor of law at the University of California College of the Law at San Francisco, wrote in an email. She predicted the legal challenge would ultimately land before the Supreme Court.
The Biden administration has vowed to fight the lawsuit.
“We are confident we will succeed,” White House press secretary Karine Jean-Pierre said yesterday. “Anytime profits of the pharmaceutical industry are challenged, they make claims about it hindering their ability to innovate. Not only are these arguments untrue, but the American people do not buy them.”
An analyst note from Evercore ISI backed Jean-Pierre up, noting that, upon initial review, Merck’s “likelihood of success is not great.”
Another big question is whether more lawsuits are on their way — and if so, when would they drop? In a statement yesterday, Nicole Longo, a spokesperson for the Pharmaceutical Research and Manufacturers of America, said the trade group will “continue to consider every tool available to protect patients and future innovation, which includes potential litigation.”
The powerful lobbying group is holding a fly-in day on Capitol Hill today, where more than 60 researchers from at least 20 biopharmaceutical companies will meet with lawmakers. Among the issues on the agenda: How certain provisions of the Inflation Reduction Act impact research and development.
Sen. Bernie Sanders (I-Vt.) is urging the federal health department to use “the full extent” of its authority to ensure the Medicare program isn’t on the hook to pay the high cost of an Alzheimer’s drug.
Sanders, a frequent pharma critic who leads the Senate’s sweeping health panel, wrote a letter this week to HHS Secretary Xavier Becerra detailing steps he believes the department should take if Biogen and Eisai don’t lower the price of their Alzheimer’s medication, Leqembi. Biden’s Medicare agency said it’ll more broadly cover the drug — with some restrictions — if it gains traditional approval from the Food and Drug Administration, which is expected in July.
What Sanders wants: The HELP Committee chair specifically pointed to a section of U.S. Code that lets the government bypass patent rights and use, or authorize third parties to use, privately owned patents. He argues HHS has the authority to do so when it comes to Leqembi, which is administered twice a month intravenously and priced at $26,500 per year.
Another option: HHS could direct the Center for Medicare and Medicaid Innovation to launch a new demonstration project that would limit payment for the drug to its “actual benefit,” Sanders wrote in the letter.
An HHS spokesperson confirmed that the agency had received the letter and will respond to Sanders directly.
