Merck was the first pharmaceutical company to sue the federal government over Medicare’s drug price negotiation program, filing its case in June 2023, within a year of the 2022 law that created the program. On August 24, 2026, a federal judge in Washington closed that case out, rejecting Merck’s constitutional claims more than three years after the company filed them. The ruling leaves the negotiation program’s foundational legal authority intact for the drug company that started the fight, and it arrived just three days before a second, broader ruling against the entire industry from a federal appeals court.
The First Challenger’s Constitutional Claims
Merck’s lawsuit rested on two constitutional theories. It argued the negotiation program violates the Fifth Amendment’s Takings Clause by coercing manufacturers into transferring their drugs to Medicare beneficiaries at below-market prices, since a company that refuses risks losing access to roughly half of the U.S. prescription drug market through Medicare and Medicaid. It also argued the program violates the First Amendment by compelling the company to sign a negotiation agreement it never wanted to sign in the first place.
U.S. District Judge Colleen Kollar-Kotelly rejected both theories, according to Patients For Affordable Drugs, which has followed the litigation since it began. On the takings claim, the court found Merck had not shown the government seized its property, since Merck remained free at every step to walk away from Medicare and Medicaid rather than accept a negotiated price. On the speech claim, the court found that signing a negotiation agreement is a condition of a voluntary government program, not compelled expression of the kind the First Amendment protects.
The full opinion is available in the public court record, and Emma Sands, P4AD’s director of media and communications, said in a statement that the ruling means every pharmaceutical company whose constitutional claims have reached a decision on the merits has now lost. The group counted the decision as the 24th court ruling favoring Medicare over the drug industry since manufacturers began suing in 2022, a tally that has grown steadily even as different companies raise different legal theories in different courts.
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A Week Earlier, a Similar Result for Teva
Merck’s loss came exactly one week after the U.S. Court of Appeals for the D.C. Circuit rejected core statutory and constitutional challenges brought by Teva Pharmaceuticals over the same program. That August 18, 2026 ruling upheld CMS’s decision to treat Teva’s Austedo and Austedo XR as a single drug for negotiation purposes, rather than as two separate products, which would have reduced the government’s negotiating leverage. The appeals court did send one narrower question, involving how generic competition should factor into the process, back to the district court for further review.
Together, the two rulings mean two of the earliest and most aggressive industry challenges to the negotiation program have now failed within the same eight-day span. Both Merck and Teva raised constitutional theories that courts have consistently declined to accept, even as the specific facts of each case differed, underscoring how uniform the judicial response to this wave of litigation has become.
The Supreme Court Has Already Passed
In May 2026, the Supreme Court declined to hear petitions from AstraZeneca, Bristol Myers Squibb, Janssen, Novartis, Novo Nordisk and Boehringer Ingelheim, each seeking review of lower-court rulings that upheld the negotiation program and each representing a different drug already selected for negotiation in an earlier cycle. That decision left the earlier appellate rulings against those companies standing as final, with no further appeal available inside the federal court system.
Merck’s case followed a different track through the district court rather than a direct appeal, which is part of why it took more than three years to resolve. With this ruling, the company that fired the first legal shot at Medicare negotiation in 2022 has become one of the last of the original wave of plaintiffs to see its case decided, and it lost on every count it raised.
Merck’s Own Drugs Are Already in the Program
The irony of Merck’s position is that its own medications are already moving through the negotiation process it tried to overturn. Januvia, Merck’s diabetes drug, was among the first ten medications CMS selected for negotiation, with its negotiated price taking effect at the start of 2026. Janumet and Janumet XR, two more Merck diabetes treatments, are among the 15 drugs selected for the second cycle, with pricing set to take effect January 1, 2027, according to CMS’s own list of selected drugs.
That overlap does not affect the legal outcome, but it illustrates how deeply embedded the negotiation program has already become in Medicare’s drug benefit. Whether or not Merck agreed with the constitutional theory behind the program, the company continued negotiating and accepting agreements on its own drugs throughout the years its lawsuit was pending, and it has given no public indication that it plans to withdraw from the second cycle now that its own case has failed.
This article was produced with AI assistance and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
