Merck is suing the Department of Health and Human Services to block Medicare drug price negotiations. Yahoo Finance Reporter Anjalee Khemlani breaks down the lawsuit, as well as other companies suing the HHS over the IRA drug price rule.

Video Transcript

JULIE HYMAN: The Department of Health and Human Services is being hit with lawsuits. And it could get worse. Starting with pharmaceutical giant Merck suing to block Medicare drug price negotiations. Calling that program unconstitutional. Could we see others? Joining us now on this is "Yahoo Finance's" reporter Anjalee Khenlani.

And it seems like we are already seeing some others.

ANJALEE KHEMLANI: We are, but not in the way that you might expect with companies lining up the way we thought might happen. And that is part of a UBS analyst note that I'll get to in a second. But as we were waiting for this segment, we just got another lawsuit, as you mentioned, Julie, from the trade group pharma. And that is including the National Infusion Center Association and Global Colon Cancer Association. This time, citing the Eighth Amendment.

So what we have is a bunch of lawsuits citing either the First, Fifth, or now, Eighth Amendment, calling the IRA unconstitutional. We've got, of course, freedom of speech. And then Fifth, you think about it as pleading against incrimination. But they're using this in the context of government seizing property. Calling that the fourth sale of the drugs through there. And then the Eighth Amendment, which as you know would be cruel and unusual punishment, is now being cited for the part of it that deals with excise tax or excessive fines.

And they're saying that forcing the companies to sell at the rate that Medicare sets would fall under that. So that's their argument, and the way that they are filing these suits against the health department. We know that Merck and Bristol Myers Squibb are the two companies that came out alone to sue separately aside from trade groups. But we've also seen some interest from some of the other large pharma companies that might be targeted based on their being the drugs that might fall under the parameters of being negotiated because they're top sellers. And, therefore, that's the target for Medicare.

But in a UBS analyst note, we saw some thoughts that maybe these companies won't come out individually and follow suit of Merck really looking at the political considerations considering the election next year. So in a quote the analysts said, our legal expert checks indicate potential for multiple other manufacturers to join the fray. But that others may choose not to litigate based on political considerations. And that could include a number of things. Of course, the election next year and what that turns out to be, but also, what's going on right now with the Democratic stronghold in certain committees, for example, in the Senate namely, Bernie Sanders at the Health Committee.