[U] Let Me Be Clear -- Rob Davis Has Made A Very Important Strategic Mistake This Morning. A Very Ill-Considered Move, Against HHS & CMS...

Updated -- 06.10.2023 @ Noon: Here about five days later, the US Chamber of Commerce has said it will also bring an offensive suit, on the same general allegations. What is interesting about that is that PhRMA, the trade group for pharma companies. . . has remained silent about a suit. Of course, PhRMA has published white papers, and so on -- but will not sue the feds on this. Mr. Davis should think deeply, about why that is so. . . and ask whether he really thinks this suit serves his shareholders' interests, long term (or just his own egotistical ones). End update.

In general, I'd been impressed with the way Mr. Davis had matured since his ultra-right reactionary days, at Lilly, and then Baxter. . . before joining Merck. And I had been impressed with how much Ken Frazier was able to moderate his more. . . rash instincts, over the prior five or so years.

But this morning, in what will likely turn out to be a career defining mistake, Rob Davis (a tax lawyer by early specialty) decided -- in a move no other pharma has EVER taken -- to directly and pre-emptively, bring an offensive federal suit against the federal government (that cuts it billions of dollars in checks each year), to prevent required price negotiations -- on a schedule of various drugs.

Sadly, this looks like the re-emergence of wild libertarian notions, in Mr. Davis' head. He argues that it violates fourth and fifth amendment rights, to require price negotiations -- with the federal government.

[Question: what does he think Boeing and General Dynamics do, when they negotiate for defense contracts -- also with the much larger federal government as the buyer?] This errant notion -- that companies should not have to negotiate on price, but automatically be awarded "cost plus contracts", on various life-saving medicines. . . died over 20 years ago.

Mr. Davis also forgets that all of pharma wildly benefits from the 340B discount programs -- and that those may immediately go away, if Mr. Davis improbably wins, and gets his way -- gets rid of any requirement to bargain on prices.

. . .Americans pay more for prescription medicines than any other country. The Biden administration's drug pricing reform aims to save $25 billion annually by 2031 through price negotiations for drugs paid for by Medicare, the government health plan for those age 65 and over. . . .

Merck called the talks with the Centers for Medicare and Medicaid Services (CMS) coercive and said it forces drugmakers to participate in "political Kabuki theater" by pretending negotiations are voluntary.

"This is not 'negotiation.' It is tantamount to extortion," Merck said in the suit.

The drugmaker also argues that the law will force companies to sign agreements conceding that the prices are fair, which it claims is a violation of the First Amendment's protections of free speech. . . .

Some years ago, a former Schering-Plough executive was widely mocked for saying that Mr. Obama's efforts to require such negotiations were "un-American". He argued that taxes on pharma concerns (another way to go at getting to fair pricing on drugs sold inside the US) were also. . . un-American. Mr. Davis is today looking and sounding quite a bit like Brent Saunders. And that's not a good thing.

He is going to get embarrassed here, in the DC District. And in the court of public opinion. His company reaps vast profits, on very good products -- but he wants to behave like Coinbase CEO Brian Armstrong?! He's about to find out what he cost his company. . . and his industry sector today. Damnation. Out.

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