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Minnesota insulin affordability law debated at Eighth Circuit

A pharmaceutical lobbying group argues the law designed to make the life-saving drug affordable to the poor constitutes an unconstitutional taking of property.

ST. LOUIS (CN) — A pharmaceutical lobbying group argued before the Eighth Circuit on Wednesday that a law creating an insulin safety net for impoverished diabetics is unconstitutional.

Attorney Joseph Guerra, representing the Pharmaceutical Research and Manufacturers of America, or PhRMA, began his argument by saying that Minnesota is arguing two extraordinary premises.

“First, that it can compel companies to repeatedly give away private property without paying any compensation for those getting the property [taken] away,” Guerra said. “And second, federal courts are powerless to do anything to redress or address clear violations of the federal takings clause.”

Minnesota Assistant Attorney General Sarah Krans countered by saying the law is needed to address the public nuisance created by Big Pharma.

“PhRMA is the wrong plaintiff, picking the wrong type of relief from the alleged taking in the wrong court,” Krans told the three-judge panel during the hearing held by teleconference. “We are in the midst of an insulin affordability crisis created by an oligopoly of insulin manufacturers charging exorbitant prices for this live-saving drug.”

At issue is a Minnesota law known as the Alec Smith Insulin Affordability Act, named after a 26-year-old Minneapolis man who died in 2017 after being unable to afford the $1,300 monthly price tag for insulin, treatment and testing. It allows qualified insulin users to buy a 30-day supply for $35 or less.

But hours before it went into effect on July 1, 2020, PhRMA sued in federal court challenging the law. PhRMA, a Washington lobbying nonprofit representing large pharmaceutical companies, claims the law violates the takings clause of the U.S. Constitution by requiring manufacturers who make over $2 million on insulin sales annually and sell it at prices over $8 per milliliter in Minnesota to provide insulin to pharmacies for the $35 monthly supplies.

The group did not seek an emergency ruling to block the law, nor did it seek a ruling recouping any money taken since the law went into effect.

U.S. District Judge David Doty, a Ronald Reagan appointee, dismissed PhRMA’s lawsuit in March, ruling his court lacked subject-matter jurisdiction. The decision prompted the appeal to the St. Louis-based Eighth Circuit.

On Wednesday, arguments centered on the question of multiplicity of lawsuits.

“We have a situation in which this law will repeatedly take insulin from manufacturers indefinitely, and as a consequence, they cannot obtain complete relief in a single action,” Guerra said. “Therefore, they must bring multiple lawsuits and that implicates the recognized doctrine that a multiplicity of suits between two parties having the same legal issues is not an adequate remedy."

Krans countered that PhRMA’s multiplicity argument doesn’t stand.

“The doctrine only applies when there's a multiplicity of suits from one wrongful action," Krans said. “Here PhRMA alleges separate takings of different pieces of property, several different actions. That's not appropriate under the multiplicity of suits theory.”

The three-judge panel questioned Krans on whether the state could have addressed the takings issues by paying for the insulin itself.

Krans argued that what the state was doing did not constitute a takings action.

“It's not a taking,” she said. “It requires manufacturers to reduce the nuisance that they caused.”

The panel continued to press Krans on the takings argument.

“The purpose of the takings clause was that it was designed to bar government from forcing some people alone to bear public burdens, which in all fairness, and justice, should be borne by the public as a whole,” Krans said. “Here, the public as a whole should not bear the burdens that the manufacturers have caused.”

Guerra, with the firm Sidley Austin in Washington, pushed back on the takings argument during his rebuttal.

“What we have here is the manufacturers are deprived of the right to use, possess and dispose of their property, that's a per se physical taking,” Guerra said. “Compensation is not provided prior to deprivation, that makes it an unconstitutional physical taking.”

The panel pressed Guerra on whether he was seeking a full injunction or a remand back to district court, and if an injunction was granted, what it would look like.

Guerra replied he was seeking an injunction.

“It’s an order stating that the defendants cannot enforce this law absent payment of just compensation for the taking,” Guerra said. “That's what the Constitution requires.”

The three-judge panel consisted of U.S. Circuit Judges Lavenski R. Smith and Raymond W. Gruender, both George W. Bush appointees, and Jonathan A. Kobes, a Donald Trump appointee.

The court took the matter under advisement. There is no timetable for a decision.

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