Drug manufacturer Johnson & Johnson sued the Biden Administration Tuesday, alleging that provisions of the Inflation Reduction Act requiring companies to negotiate drug prices with Medicare violate the Fifth Amendment. File Photo by Justin Lane/EPA-EFE
July 18 (UPI) -- Drug manufacturer Johnson & Johnson sued the Biden administration in New Jersey federal district court Tuesday over its drug-pricing policies mandated by the Inflation Reduction Act.
In the suit, the New Jersey-based drug maker says the Inflation Reduction Act allows government seizure of property without proper compensation, a violation of the Fifth Amendment.
"Today, we filed litigation against the U.S. Department of Health and Human Services as well as the Centers for Medicare and Medicaid Services to challenge the innovation-damaging drug pricing provisions of the Inflation Reduction Act (IRA)," Johnson & Johnson said in a statement Tuesday.
"The IRA breaks the agreement at the heart of the patent and regulatory laws: when companies invest and succeeded at developing innovative new treatments, they are awarded time-limiting and constitutionally protected rights in their innovations," the company said.
The Inflation Reduction Act allows Medicare to negotiate drug prices with manufacturers, and the Centers for Medicare and Medicaid Services is expected to release a list of which drugs will be subject to negotiations by September.
Companies whose products are listed will have until October to sign agreements to take part in negotiations.
"With the implementation of the IRA, the government is forcing [Johnson & Johnson subsidiary company] Janssen to provide its innovative, patented medicines on pricing terms that by law must be significantly below market prices," the company said.
"If manufacturers do not 'agree' to the government-dictated terms of the IRA, they face massive penalties up to 1900% of a selected drug's daily sales or are forced to withdraw all their products from both Medicare and Medicaid -- potentially depriving nearly 40% of U.S. patients of needed medicine," Johnson & Johnson said.
The company also alleges First Amendment violations because, it says, the IRA effectively requires them to agree that fair prices are being negotiated even if the company may disagree.
"While the government may choose to deceptively describe the program as involving an 'agreement' to 'negotiate' a 'fair' price, it cannot force manufacturers to echo its misleading language," Johnson & Johnson said in their filing.
The pharmaceutical companies Bristol Myers Squibb and Merck previously brought suits against the administration, making similar arguments.
"Because this statute unlawfully impairs our core purpose of engaging in innovative research that saves and improves lives, Merck intends to litigate this matter all the way to the U.S. Supreme Court if necessary," Merck spokesperson Robert Josephson said in June.