2023-06-06 11:12:43 ET
Merck & Co Inc ( NYSE: MRK ) is in focus this morning after the pharmaceutical giant sued the Biden administration in a federal district court.
Here’s what inspired the lawsuit
In its complaint, the multinational took on “IRA” – the Inflation Reduction Act that enables Medicare to significantly lower drug prices for seniors.
Under the Inflation Reduction Act, the Government will requisition Merck’s patented pharmaceutical products and transfer them to Medicare beneficiaries through forced sales.
The pharma industry at large has been against the IRA as it could suppress new drug development. The stock market news arrives more than a month after Merck & Co reported its financial results for the first quarter that handily topped Street estimates.
Shares of the Rahway-headquartered firm are roughly flat for the year at writing.
Merck says the act is unconstitutional
Merck found it synonymous to extortion for the Department of Health and Human Services to have the power to dictate drug prices.
The use of its property for public use, it added, was also in clear violation of the Fifth Amendment. Merck’s attorneys wrote in the complaint :
Those forced sales – coerced by threat of draconian penalties that Government has admitted no manufacturer could ever afford – will deprive Merck of possession and title to its personal property.
In its lawsuit, Merck & Co Inc also said the scheme was in breach of the First Amendment as it defies the company’s right to free speech. In April, the New York listed firm said it will buy Prometheus Biosciences for nearly $11 billion as Invezz reported here .
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