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Medicare said on Friday it would allow drug companies to publicly discuss the program’s historic drug price negotiations, waiving a requirement for secrecy that the industry argued violated the First Amendment in a lawsuit filed this month.

In initial guidance issued in March, Medicare prohibited the industry from publicly disclosing information about the lower prices the federal government initially offered for drugs targeted by the program, and why the government chose that price point.

Medicare also prohibits companies from disclosing any oral conversations made during negotiations. It also requires the company to destroy any information within 30 days if the drug is no longer selected for negotiation.

In revised guidance issued Friday, Medicare said companies “may choose, at their sole discretion, to publicly disclose information about ongoing negotiations.”

The Lower Inflation Act, passed last year, for the first time authorized Medicare to negotiate prices directly with drug companies.The plan is a central pillar of the Biden administration’s efforts to rein in rising drug prices in the United States

Merckthe American Chamber of Commerce, Bristol-Myers Squibb Industry lobby group Pharmaceutical Research and Manufacturers of America asked a federal court this month to declare drug price negotiations unconstitutional.

Merck, the Chamber of Commerce and Bristol-Myers Squibb argued in the lawsuit that Medicare imposed a gag order that effectively forbids the companies from speaking out against the federal government’s position, in violation of the First Amendment.

However, the industry’s lawsuit also focused on broader allegations that the scheme violated due process and seized private property without just compensation under the Fifth Amendment to the U.S. Constitution.

Health and Human Services Secretary Xavier Becerra vowed on Friday to press ahead with negotiations despite the pharmaceutical industry’s lawsuit.

“Drug companies have been making record profits for decades,” Becerra said in a statement. “Now they are lining up to block this administration’s efforts to negotiate better drug prices for our families.

“We’re not going to be intimidated,” Becerra said

HHS will publish a list of 10 high-cost drugs selected for negotiation by September. The two companies must decide next month whether to join the talks.

Drugmakers who choose not to participate face severe financial penalties. They can avoid these penalties by terminating participation in Medicare and Medicaid drug rebate programs.

The companies argue that exiting the rebate program, which accounts for nearly half of annual U.S. prescription drug spending, is not a viable option.


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