Johnson & Johnson (NYSE:JNJ) on Tuesday sued the Biden administration over Medicare’s new powers to slash drug prices, making it the third pharmaceutical company to challenge the controversial provision of the Inflation Reduction Act.
The lawsuit filed in federal district court in New Jersey argues the Medicare negotiations violate the First and Fifth Amendments of the U.S. Constitution.
J&J’s complaint asks a judge to block the U.S. Health and Human Services Department from compelling the drugmaker to participate in the program.
The company said its suit aims to stop the “innovation-damaging congressional overreach that threatens the United States’ primacy in developing transformative therapies and in patients’ access to those treatments.”
President Joe Biden’s Inflation Reduction Act, which passed in 2022 by a narrow party-line vote, empowered Medicare to negotiate drug prices for the first time in the program’s six-decade history.
The provision aims to make drugs more affordable for older Americans but will likely reduce pharmaceutical industry profits.
J&J said its patented drug Xarelto, which treats blood clots and reduces the risk of stroke, will be subject to price negotiations in 2023 because it is among the 10 most widely reimbursed drugs for Medicare Part D patients.
J&J argues that Medicare negotiations “inflict an uncompensated physical taking” of the company’s drug and essentially force J&J to provide access to Xarelto on terms set by the government that the company “would never voluntarily” agree to.
JNJ shares advanced $1.24 to $160.30.
