Judge Hears Big Pharma Case Against Minnesota Insulin Program

MINNEAPOLIS (CN) — A challenge to Minnesota’s effort to put cheap insulin in the hands of impoverished diabetics faced its first hurdle Tuesday in federal court, where a pharmaceutical lobbying group argued for an injunction to prohibit the law’s enforcement.

At issue is the Alec Smith Insulin Affordability Act, a law passed last year to combat the skyrocketing prices of insulin by allowing certain low-income diabetics to buy a 30-day supply of the lifesaving hormone for just $35.

The law, named for a 26-year-old Minneapolis man who died in 2017 while rationing his insulin, passed both the Democrat-controlled Minnesota House and the state’s Republican-run Senate with bipartisan support.

The Pharmaceutical Research and Manufacturers of America, or PhRMA, filed suit in July immediately after the law went into effect, prompting outcry from blindsided state politicos. In negotiations with Republicans, Democratic Governor Tim Walz said lawmakers had been assured that industry groups would not sue if a compromised version of the original bill was passed.

The lobbying group, represented by Joseph Guerra of the Washington firm Sidley Austin, argued in Tuesday’s hearing that the law created an unconstitutional taking of manufacturers’ insulin by requiring them to provide it at a reduced price.

PhRMA is asking Senior U.S. District Judge David S. Doty, a Ronald Reagan appointee, for summary judgment, or failing that, an injunction preventing enforcement of the law.

“We are in a situation in which obviously the insulin is not the product of any program Minnesota has put in place. They’re simply trying to take away the insulin,” he said. “The state does not have any sovereign right to continue, week after week, month after month, year after year, violating the takings clause.”

Minnesota Assistant Attorney General Sarah Krans, meanwhile, argued that no taking was occurring since the manufacturers had similar programs making insulin available at the same price. If it was, she added, it would be compensable through inverse-condemnation proceedings, meaning the contested law is still constitutional.

She also argued for dismissal on the grounds that the manufacturers, not PhRMA, had standing to bring such a case, that the individual defendants named did not have authority to enforce the law being challenged, and that the venue was improper in any case.

“There can be no question that the taking of insulin is compensable. It is a commodity,” she said. “PhRMA’s unsupported assumption that there will be a multiplicity of suits does not render the inverse condemnation proceedings inadequate.”

Krans added, “Because the takings claims here were brought by the wrong plaintiff, in the wrong court, seeking the wrong kind of relief, this case should be dismissed.”

Guerra took issue with that argument.  

“No one knows how much insulin is going to be taken under the statute. The only thing we do know is that the program… goes on indefinitely,” he said. “We have a right, where we’re facing the prospect of multiple suits, to an injunction.”

He also alluded to the possibility of manufacturers having to bring those consolidated inverse-condemnation suits over and over again, with six-year gaps between each.

“The manufacturers are entitled to a reasonably prompt award of just compensation. Six years is not that,” Guerra said.  

Alec Smith’s mother, Nicole Smith-Holt, leads the Minnesota chapter of Insulin4all, a campaign for insulin access started by the diabetes-advocacy nonprofit T1International. The campaign has joined the case as amicus curiae and opposed PhRMA’s motion for summary judgment.

After tuning in to the Zoom hearing, Smith-Holt said she was disappointed by PhRMA’s arguments.

“I was frustrated, of course, with PhRMA’s indication that they are suffering irreparable harm by helping to save people’s lives,” she said in an interview. “That was really frustrating to me.”

Smith-Holt added that the pandemic is escalating issues of insulin affordability, with lost jobs putting many diabetics out of work and health insurance and closed borders preventing Minnesotans from buying the hormone for a fraction of the price in Canada.

Prices in Minnesota, she said, have risen to just under $350 a vial, which only gets most diabetics through about a week.

“If we’re talking about somebody who doesn’t have insurance… it’s going to cost that person about $1,300 to $1,400” per month, she said. “And then you throw in the needles, and the test strips you need, and you’re looking at… more than most people’s mortgages.”

Smith-Holt said the programs provided by the manufacturers also leave major gaps.

“They’re not enough. They’re difficult to apply for, they’re difficult to be approved for, they’re cumbersome, they throw up hurdles,” she added. “The insulin manufacturing companies have always stood by the fact that they offer these programs. But these programs aren’t working for people… people are dying, so what they’re doing is not enough.”

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