On March 7 the District Court of New Jersey will hear oral arguments from 4 pharmaceutical companies against the Inflation Reduction Act (IRA) in one day – BMS, Janssen, Novartis and Novo Nordisk. When the arguments line up and time is ticking, get it done.
All four companies have drugs that are part of the current “negotiation” process for 2026 and have received their first “offers” on February 1 and are expected to respond by March 1. The quotation marks are intentional. I am not a lawyer; I don’t play one on LinkedIn but I don’t think it is fair to call any of this a true negotiation. But we’ll get to that when we get to Fifth Amendment (Takings clause.)
Here is a grid of the four companies and their arguments:
| First Amendment (Compelled Speech) | Fifth Amendment (Takings Clause) | Excessive Fines Clause | Separation of Powers and Due Process Clause | Violation of Administrative Procedures Act | Ultra Vires | Unlawful Conduct | |
| BMS | X | X | |||||
| Janssen | X | X | |||||
| Novartis | X | X | X | ||||
| Novo Nordisk | X | X | X | X | X |
There are lots of terrific resources if you love this stuff and want to dig in further. My favorite go-to – Georgetown, of course. But for a quick hit –
The First Amendment, Compelled Speech argument says that companies are forced to say that they agree to a price when really it is all a forced negotiation.
The Fifth Amendment, Unlawful Taking Argument says that the government is taking the products and, through forced sales, giving them to third parties (in this case plans, providers.)
These resonate with me, especially when combined with the Excessive Fines clause argument (not a tax to discourage use, but a penalty to refuse to negotiate or agree to the price set by Medicare.)
The analogy I have in my head is going to a car dealership and saying you want to buy a car. You tell them your price (what you think the car is worth to you) and they counter. But no matter what they say, you’re driving home in that new car. If they refuse, they can’t sell any of their cars to men.
The IRA requires manufacturers to enter these “negotiations” and come to an “agreement” and, if they don’t, Medicare moves ahead anyway. If manufacturers don’t agree they can pay a fine of almost 2,000% of the prior year’s sales or have ALL of their drugs pulled from government sales. I mean if it was just that one drug, that would be bad enough. But ALL drugs.
Novo Nordisk argues the compelled speech but then takes a different approach in its suit and argues that due process wasn’t followed, violation of Administrative Procedures Act, etc.
I’m putting the 7th on my calendar. Popcorn is on the menu.