On behalf of the Atlantic Legal Foundation, I have written and filed an amicus brief supporting the pending petitions for a writ of certiorari in Janssen Pharmaceuticals, Inc. v. Kennedy (25-749) & Bristol Myers Squibb Co. v. Kennedy (25-751). Both petitions ask the Supreme Court to hold the Inflation Reduction Act’s misleadingly named “Drug Price Negotiation Program” unconstitutional.
Case Background
Under the Program, 42 U.S.C. § 1320f et seq., the Centers for Medicare & Medicaid Services (CMS) designates certain widely used, brand‑name prescription drugs as “negotiation‑eligible.” Following a supposed “negotiation” and “agreement” between CMS and each drug’s manufacturer, the drug can be sold within the enormous Medicare/Medicaid system only at a sharply discounted, government‑dictated “maximum fair price.”
Several manufacturers of “negotiation‑eligible” drugs have filed suits challenging the constitutionality of the Program. These include suits filed in the New Jersey federal district court by Janssen Pharmaceuticals, Inc. and Bristol Myers Squibb Co.—the research‑oriented companies that developed Xarelto and Eliquis, blood‑clot‑prevention medications.
Janssen and BMS contend that the Program violates the Fifth Amendment by physically taking their property (i.e., their pharmaceutical products) without payment of just compensation, and violates their First Amendment right to freedom of speech by compelling them to express the government’s viewpoint and messaging about the Program’s supposed nature and virtues.
The district court granted summary judgment to the government. In a 2‑to‑1 decision, the Third Circuit affirmed, circumventing the manufacturers’ constitutional claims on the theory that their participation in the Program and Medicare/Medicaid is voluntary. A strong dissenting opinion by Circuit Judge Thomas Hardiman explains that participation in the Program is not voluntary and discusses why the Program is unconstitutional.
Janssen and BMS are seeking Supreme Court review of their constitutional claims.
Their certiorari petitions explain that as a practical matter, participation in the Program is mandatory because extraordinarily harsh financial penalties are imposed on non‑participants, and “opting out” of the Medicare/Medicaid system—which accounts for half of U.S. prescription drug sales—is unrealistic.
ALF’s Amicus Brief
ALF’s brief argues that regardless of whether participation in the Drug Price Negotiation Program is voluntary, it imposes unconstitutional conditions, which render the Program invalid.
Under the “unconstitutional conditions doctrine,” which the Supreme Court has applied in many contexts, the government cannot compel a company or individual to relinquish constitutional rights in return for receiving a governmental benefit.
Thus, pharmaceutical companies cannot be compelled to forgo their constitutional rights to just compensation and freedom of speech as a condition for receiving a governmental benefit—here, the ability to sell their products within the financially crucial Medicare/Medicaid system. “Consent” is irrelevant to whether government-imposed conditions are constitutional.
The amicus brief explains that Supreme Court review is warranted also because there is a vital public interest in the question of whether the Program is constitutional.
At the political sound-bite level, forcing pharmaceutical companies to slash prices for their newest, most innovative, or widely used brand-name prescription drugs seems consistent with the public interest. But in reality, such government-compelled, highly discounted sales are detrimental to the public interest because they significantly diminish the financial resources that research-oriented companies like petitioners require to invest in new drug R&D.