The Inflation Reduction Act’s highly politicized, misleadingly named, “Drug Price Negotiation Program,” 42 U.S.C. § 1320f et seq., is a form of government-imposed price control. Under the Program, the Centers for Medicare & Medicaid Services (CMS) selects certain “negotiation-eligible” brand-name drugs. Following a supposed “negotiation” and “agreement” with its manufacturer, each such drug can be sold within the enormous Medicare/Medicaid system only at a sharply discounted, government-imposed, “maximum fair price.”
As it has in Bristol Myers Squibb Co. & Janssen Pharmaceuticals, Inc. v. Becerra, Nos. 24-1820 & 24-1821 (3d Cir.), ALF has filed an amicus brief in Boehringer Ingelheim Pharmaceuticals, Inc. v. Dep’t of HHS, No. 24-2092 (2d Cir.), supporting a constitutional challenge to the Drug Price Negotiation Program.
Case Background
Boehringer Ingelheim Pharmaceuticals, Inc. is the research-oriented company that invested billions of dollars and years of time to develop Jardiance®—a prescription medication that the Food and Drug Administration (FDA) has approved for a variety of uses, including treatment of type 2 diabetes and lowering that condition’s cardiovascular risks. CMS has designated Jardiance® as “negotiation eligible” for purposes of the program.
Boehringer filed suit in Connecticut federal district court challenging the constitutionality of the Program. Boehringer argues that the Program violates its Fifth Amendment right to procedural due process, effects a physical taking of its Jardiance® products in violation of the Fifth Amendment, and compels it to engage in speech that conveys the government’s viewpoint and messaging about the Program’s alleged nature and virtues. The district court rejected these constitutional claims and granted summary judgment to the government, in part on the theory that the company’s participation in Medicare/Medicaid and the Drug Price Negotiation Program is voluntary. Boehringer has appealed to the U.S. Court of Appeals for the Second Circuit.
ALF’s Amicus Brief
ALF’s amicus brief addresses the “unconstitutional conditions doctrine.” This well-established principle prevents the government from coercing individuals or corporations into relinquishing their constitutional rights (e.g., the right to just compensation for a taking of their property or their right to freedom of speech) in return for receiving a governmental benefit (e.g., eligibility to sell pharmaceuticals within the Medicare/Medicaid system).
Oblivious to reality, the district court held that Boehringer’s participation in Medicare/Medicaid is voluntary, and from this fictional premise, concluded that its constitutional claims lack merit, and thus, that the unconstitutional conditions doctrine does not apply. Contrary to the district court’s analysis, Boehringer’s supposed voluntary, i.e., consensual¸ participation in the Program is irrelevant to operation of the unconstitutional conditions doctrine where, as here, companies must relinquish their constitutional rights as a condition for receiving a governmental benefit (e.g., participation in the Medicare/Medicaid system). Citing scholarly discussions, ALF’s amicus brief explains why the unconstitutional conditions doctrine applies even if participation in a governmental program is voluntary, and certainly where, as in this case, participation as a practical matter is obligatory.
In addition, ALF’s brief explains why the price slashing mandated by the Program harms the public interest. This is because the Program diminishes the financial resources that research-oriented companies need to reinvest in proprietary new drug research & development. Developing and commercializing a new prescription drug—including the formidable and time-consuming challenge of obtaining FDA approval—is an extraordinarily costly and financially risky process. Myopically focusing on prices alone fails to take into account the bigger picture—the often insurmountable financial, scientific, regulatory, and/or commercial hurdles that a new drug, even one that shows promise during early testing—must overcome before it can be made available to the public.