Amicus Brief: Janssen Pharmaceuticals v. Kennedy

The Inflation Reduction Act of 2022 purports to create affordable prescription drugs. In reality, “affordability” is achieved by essentially forcing drug manufacturers to sell certain drugs at below market prices. The government says it gives drug manufacturers a “choice,” but it is little more than a shakedown: sell the drugs at artificially low prices or withdraw all drugs from federal health care programs and pay fines and taxes. In addition, the manufacturers are required to describe the process as a “negotiation” for a “fair price.” 

Drug manufacturers have sued, arguing that the program is an unconstitutional taking of their property (the drugs) via a compelled maximum price. They also argue that the First Amendment prohibits the government from requiring them to describe the price as “fair.” The Third Circuit upheld the law, holding that the manufacturers chose to participate in the Medicare and Medicaid programs, and therefore they essentially agreed to the new regulations. And even though the companies must affirm that the price at which they must sell their product is the “maximum fair price,” the Third Circuit also found no First Amendment violation under the compelled speech doctrine.

The Manhattan Institute has filed an amicus brief supporting the companies' petitions to the Supreme Court. Just as the government can't “solve” the housing affordability crisis by coercing builders to sell homes at artificially low prices, it can't make drugs more affordable through a program that is basically extortion. Although participating in Medicare might have been originally voluntary, the government isn't allowed to drastically change the terms such that billions of dollars are at stake. Nor can the government compel the companies to describe the price as something that it is not. This is a backdoor attempt to manufacture “affordability,” and the Court should take the case to clarify that affordability can't be achieved through blunt economic coercion.

Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute. Follow him on Twitter here.

Trevor Burrus is a legal policy fellow at the Manhattan Institute.

James R. Copland is a senior fellow at the Manhattan Institute and director of Legal Policy.

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