Amicus Curiae Brief — Janssen Pharmaceuticals, Inc., Petitioner v. Robert F. Kennedy, Secretary of Health and Human Services, et al.

Nos. 25-749 and 25-751

IN THE

Supreme Court of the United States

————

JANSSEN PHARMACEUTICALS INC.,

Petitioner,

v.

ROBERT F. KENNEDY, JR., SECRETARY OF HEALTH AND

HUMAN SERVICES, et al.,

Respondents.

————

BRISTON MYERS SQUIBB COMPANY,

Petitioner,

v.

ROBERT F. KENNEDY, JR., SECRETARY OF HEALTH AND

HUMAN SERVICES, et al.,

Respondents.

————

On Petitions for Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

————

BRIEF OF MANHATTAN INSTITUTE AS AMICUS CURIAE

IN SUPPORT OF PETITIONERS

————

C. MITCHELL BROWN

NELSON MULLINS RILEY &

SCARBOROUGH LLP

1320 Main Street

17th Floor

Columbia, SC 29201

TREVOR BURRUS

ILYA SHAPIRO

MANHATTAN INSTITUTE

52 Vanderbilt Ave.

New York, NY 10017

JEFFREY A. WALD

Counsel of Record

NELSON MULLINS RILEY &

SCARBOROUGH LLP

380 Knollwood Street

Suite 530

Winston-Salem, NC 27103

(336) 774-3335

jeffrey.wald@nelsonmullins.com

Counsel for Amicus Curiae Manhattan Institute

WILSON-EPES PRINTING CO., INC. – (202) 789-0096 – WASHINGTON, D.C. 20002

(i)

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..................................... iii

INTERESTS OF AMICUS CURIAE ......................... 1

SUMMARY OF ARGUMENT.................................... 1

REASONS FOR GRANTING THE WRIT................. 5

I.

II.

Participation In the Program Is Not

Voluntary ......................................................... 5

A.

The Government’s

Circuit’s Reasoning

and

Third

B.

The Program Must Be Evaluated

Under the Law Concerning

Consensual Agreements

5

8

1.

The Agreements Are Voidable

Because of Undue Influence .... 10

2.

The Agreements Are Void as

Against Public Policy ............... 14

The Program Violates Both the Fifth

and First Amendments ................................. 17

A.

B.

The

Program

Is

Amendment Takings

a

Fifth

The Program Violates the NoCompelled-Speech Doctrine

17

19

1.

The Compelled Speech is Not

Incidental to Regulated Conduct.

.................................................. 19

2.

The Program Unconstitutionally

Compels Viewpoint-Based

Speech....................................... 22

(ii)

CONCLUSION ......................................................... 25

(iii)

TABLE OF AUTHORITIES

Page(s)

U.S. Supreme Court Cases

Agency for Int’l Dev. v. All. for Open Soc’y

Int’l, Inc.,

570 U.S. 205 (2013) .................................8, 23, 24, 25

Azar v. Allina Health Servs.,

87 U.S. 566 (2019) .................................................. 11

Barnes v. Gorman,

536 U.S. 181 (2002) ................................................ 13

Cedar Point Nursery v. Hassid,

594 U.S. 139 (2021) .................................... 17, 18, 19

Dolan v. City of Tigard,

512 U.S. 374 (1994) .................................................. 9

Evans v. Jeff D.,

475 U.S. 717 (1986) (Brennan, J.,

dissenting) .............................................................. 14

Expressions Hair Design v. Schneiderman,

581 U.S. 37 (2017) .................................................. 21

Frost & Frost Trucking Co. v. Railroad

Comm’n of Cal.

271 U.S. 583 (1926) .................................................. 7

Horne v. Dep’t of Agric.,

576 U.S. 350 (2015) .................................1, 17, 18, 19

Liquormart, Inc. v. Rhode Island,

517 U.S. 484 (1996) ................................................ 16

McCulloch v. Maryland,

4 Wheat. 316, 4 L.Ed. 579 (1819) .......................... 17

(iv)

Nat’l Fed’n of Indep. Bus. v. Sebelius,

567 U.S. 519 (2012) ............................................ 8, 14

Nat’l Inst. of Fam. & Life Advocs. v.

Becerra,

585 U.S. 755 (2018) ................................................ 22

Oubre v. Entergy Operations, Inc.,

522 U.S. 422 (1998) (Breyer, J. concurring) .......... 14

Pennhurst State School and Hospital v.

Halderman,

451 U.S. 1 (1981) .................................................... 13

Rumsfeld v. F. for Acad. & Institutional

Rts., Inc.,

547 U.S. 47 (2006) ...................................... 19, 20, 21

Steward Machine Co. v. Davis,

301 U.S. 548 (1937) ................................................ 13

Taylor v. Bemiss,

110 U.S. 42 (1884) .................................................. 10

W. Virginia State Bd. of Educ. v. Barnette,

319 U.S. 624 (1943) ................................................ 23

Wooley v. Maynard,

430 U.S. 705 (1977) ................................................ 23

Other Federal Cases

Francois v. Francois,

599 F.2d 1286 (3d Cir. 1979) ........................... 11, 12

Kentucky v. Biden,

23 F.4th 585 (6th Cir. 2022) ............................ 12, 13

Sanofi Aventis U.S. LLC v. HHS,

58 F.4th 696 (3d Cir. 2023) .................................... 11

(v)

Federal Statutes

42 U.S.C.A. § 1320f-3(b)(1)-(2)(A) ............................ 6

26 U.S.C. §§ 5000D(b)(1) .......................................... 6

26 U.S.C. §§ 5000D(c) .............................................. 6

42 U.S.C. § 1320f-6(a) .............................................. 6

42 U.S.C. § 1320f-6(c) ............................................... 6

42 U.S.C. § 1320f(d)(5) ............................................. 6

42 U.S.C. § 1395w-111(i)........................................ 12

U.S. Code §§ 1320f–2(a)(1)(A)-(B), 1320f6(a) ...................................................................... 6, 18

Federal Regulations and Court Rules

45 C.F.R. § 89.1, subd. a ........................................ 24

Other Authorities

2 E. Allan Farnsworth, Farnsworth on

Contracts 910 n. 4 (3d ed. 2004) ............................ 14

17A C.J.S. Contracts § 260 .................................... 10

Daniel E. Orr, Congress Must Fix the

Inflation Reduction Act Before Millions Lose

Treatment for Rare Diseases, 42 Yale L. &

Pol'y Rev. 1 (2023) .................................................. 11

Eugene Volokh, The Law of Compelled

Speech, 97 Tex. L. Rev. 355 (2018) ........................ 22

Kathleen M. Sullivan, Unconstitutional

Conditions, 102 Harv. L. Rev. 1413 (1989) ............. 9

Philip Hamburger, Purchasing Submission:

Conditions, Power, and Freedom 63 (2021) ............ 9

(vi)

Philip Hamburger, Unconstitutional

Conditions: The Irrelevance of Consent, 98

Va. L. Rev. 479 (2012) ............................................ 16

Richard F. Duncan, Viewpoint

Compulsions, 61 Washburn L.J. 251 (2022) ......... 22

Stephen Ezell, Ensuring U.S.

Biopharmaceutical Competitiveness, Info.

Tech. & Innovation Found. 30 (July 2020),

https://www2.itif.org/ ............................................. 12

Thomas C. Grey, Origins of the Unwritten

Constitution: Fundamental Law in

American Revolutionary Thought, 30 Stan.

L. Rev. 843 (1978) .................................................. 17

-1INTERESTS OF AMICUS CURIAE1

The Manhattan Institute is a nonprofit public

policy research foundation whose mission is to

develop and disseminate new ideas that foster

greater

economic

choice

and

individual

responsibility. It has historically sponsored

scholarship and filed briefs opposing regulations that

interfere with constitutionally protected liberties,

including the property rights and speech rights at

issue in this case.

SUMMARY OF ARGUMENT

“Selling produce in interstate commerce, although

certainly subject to reasonable government

regulation, is . . . not a special governmental benefit

that the Government may hold hostage, to be

ransomed by the waiver of constitutional protection.”

Horne v. Dep’t of Agric., 576 U.S. 350, 366 (2015).

What’s true for produce is true for prescription drugs.

Although subject to reasonable government

regulation, selling prescription drugs may not be held

hostage by the federal government. But that is

precisely what the government has done in passing

the misnamed Medicare Drug Price Negotiation

Program (the “Program”), part of the Inflation

Reduction Act (“IRA”), effectively commandeering a

portion of the most widely prescribed prescription

drugs for government use without just compensation,

while simultaneously compelling untrue speech

No counsel for a party authored this brief in whole or in

part, and no person other than amicus or their counsel made any

monetary contribution to its preparation or submission. The

parties received timely notice of intent to file this brief.

1

-2about such commandeering (i.e., requiring that

pharmaceutical

companies

describe

that

commandeering as “negotiations” for “fair prices”).

The government wields immense power over

nearly every sector of the American economy. The

amount of pressure it can apply to different

industries is essentially impossible to calculate. The

incentives to apply that pressure arise in

innumerable ways in order to satisfy voter demands.

Simply put, allowing programs like this is dangerous

to a free and transparent democracy.

To obtain positive optics with the public the

government compels pharmaceutical companies to

affirm that they have “engaged in negotiation” with

the government to determine the “maximum fair

price” of selected prescription drugs, and they “agree”

to provide access to these drugs at less than fair

market value. In short, the government pretends

through these forced declarations that the Program’s

requirements are instead a voluntary arms-length

negotiation. Pharmaceutical companies are also

required to state, falsely, that they are engaging in

such negotiations. Such compelled speech is a First

Amendment violation and has zero legitimate public

interest.

The Third Circuit rejected petitioners’ Fifth

Amendment takings and First Amendment free

speech claims on the grounds that petitioners’ overall

participation in Medicare and Medicaid is voluntary.

In so doing, the Third Circuit substituted fiction for

fact, and theory for reality. Having first created

government programs in which the government

becomes the purchaser for nearly 50% of the

-3prescription

drug

market

and

encourages

pharmaceutical companies to sell their important

life-saving drugs for use by over a hundred million

Americans, the government necessarily created for

itself great market power. Pharmaceutical

companies became willing participants in Medicare

and Medicaid based on settled expectation interests

that the government would be an arms-length good

faith purchaser. However, once having achieved its

market position, rather than using its market power

to in fact attempt to negotiate for lower prices

respecting particular drugs, the government passed

the IRA and the Program, which is unconstitutional

as applied, as explained herein.

The Program mandates that Medicare recipients

be given access to prescription drugs at below market

prices, with the only alternative being that the

pharmaceutical companies withdraw entirely from

both Medicaid and Medicare programs2, but also

simultaneously the government requires that the

pharmaceutical companies state, in writing, that the

below market prices are not actually mandates, but

instead the product of fictional negotiation. The

Program is a series of economic thumbscrews that the

recipient is required to describe as a “negotiation.”

This case presents multiple important questions,

including:



Does the Nollan-Dolan unconstitutionalconditions test only apply to takings claims

2 This supposed withdrawal ability is neither practical nor lawful

under the terms of the IRA for the reasons set forth by

petitioners, and because CMS has no power to alter the meaning

of the statutory termination provisions by way of regulation.

-4involving land-use permits, as determined by

the Third Circuit?



Is

economic

coercion/dragooning

only

constitutionally problematic under the Tenth

Amendment when federalism concerns are at

play, or is the federal government also barred

from violating private constitutional rights

through economic coercion?



Does the alleged voluntary participation in

Medicare and Medicaid foreclose petitioners’

constitutional arguments?

Congress has enacted a novel law that has no

direct precedent. Although the reach of the Program

is limited to drug companies, the underlying

constitutional theory adopted by the Third Circuit is

broad and has far-reaching consequences. If Congress

can require access to (i.e., take) the most successful

and profitable prescription drugs at pennies on the

dollar, and compel the drug-makers’ speech in the

process, it is not hard to imagine how Congress could

dodge constitutional scrutiny in many other areas

impacting individuals, nonprofits, and businesses. It’s

also not difficult to imagine why Congress would

increasingly use this method if this Court allows it.

The people want a lot of “affordable” things, and they

also don’t want to pay extra taxes in the form of direct

subsidies. Elected representatives want to “give” their

voters affordable things, and laws like this allow them

to do so by forcing companies to essentially give away

products—and then not be allowed to accurately

describe what happened.

Because participation in the Program is not in

reality voluntary, because the Program compels false

-5speech, and because the so-called agreements that

knit the Program together are a product of undue

influence and are against public policy, the Court

should grant certiorari in both cases and reverse the

Third Circuit’s decision.

REASONS FOR GRANTING THE WRIT

I. Participation

Voluntary.

In

the

Program

Is

Not

A. The Government’s and Third Circuit’s

Reasoning.

Because participation in Medicare is completely

voluntary, the Third Circuit concluded, the Program

does not violate the Constitution. There are

fundamental flaws with this reasoning. First, even if

participation in Medicare may initially and generally

be voluntary, it does not follow that participation in

a specific Medicare program is voluntary. By way of

example, one may enter another’s home voluntarily,

but then be coerced to stay because of the

homeowner’s threats. A manufacturer’s decision to

participate in Medicare prior to the enactment of the

Program should not be used to declare the Program

constitutional by voluntary consent. Instead, this

Court must analyze whether participation in this

specific Program is voluntary.

This leads to a second problem: participation in

the Program is not voluntary under any legal or

colloquial understanding of the term. Consider how

the Program works. First, CMS alone decides which

initial 10 drugs are selected for the Program, and

which drugs are selected in each applicable period

thereafter. Second, manufacturers must enter into

agreements with CMS to negotiate “maximum fair

-6prices.” By the terms of the Program, the

“negotiation” is a one-way discussion. The price of a

selected drug cannot go up; instead, the price is

capped at between 40% and 75% of market

benchmarks. Third, manufacturers must disclose

confidential information to CMS for purposes of

helping CMS “achieve the lowest maximum fair price

for each selected drug.” 42 U.S.C.A. § 1320f-3(b)(1)(2)(A). Fourth, manufacturers must negotiate with

CMS on an expedited and mandated schedule, with

the Secretary unilaterally setting the maximum fair

price for the drug by August 1, 2024. 42 U.S.C.

§ 1320f(d)(5). Fifth, manufacturers must “provide

access to a price that is equal to or less than the

maximum fair price for such drug” to Medicare

recipients and to pharmacies, hospitals, physicians,

and others who dispense the drug to Medicare

recipients. 42 U.S. Code §§ 1320f–2(a)(1)(A)-(B),

1320f-6(a).

None of these five steps are voluntary. They are

all statutorily mandated provisions. And notably,

these provisions do not apply based on a

manufacturer’s participation in Medicare, or to any

other action by a manufacturer. Instead, they apply

based on the government’s expenditures in the

applicable time frame.

According to the government, a manufacturer has

not one, but four choices: 1) it can pay an excise tax,

26 U.S.C. §§ 5000D(b)(1); 2) pay civil penalties, 42

U.S.C. § 1320f-6(a), (c); 3) divest itself completely of

its most profitable prescription drugs, Revised

Guidance at 131-32; or 4) withdraw all of its drugs

from federal healthcare programs, 26 U.S.C.

§§ 5000D(c).

-7These “choices” are not voluntary. To be

voluntary, a choice must be “[d]one by design or

intention,” and [u]nconstrained by interference [or]

impelled by outside influence.” Black’s Law

Dictionary (11th ed. 2019). In contrast, an

involuntary choice is one “[n]ot resulting from a free

and unrestrained choice.” Id.

Frost & Frost Trucking Co. v. Railroad Comm’n of

Cal. is instructive. 271 U.S. 583 (1926). There, the

Court considered whether a State could condition a

private carrier’s use of public highways on the

requirement that it submit to all the conditions of

being a common carrier. The Court held that this

regulation was unconstitutional, reasoning “[i]t

would be a palpable incongruity to strike down an act

of state legislation which, by words of express

divestment, seeks to strip the citizen of rights

guaranteed by the federal Constitution, but to uphold

an act by which the same result is accomplished

under the guise of a surrender of a right in exchange

for a valuable privilege which the state threatens

otherwise to withhold.” Id. at 593–94. Like here, the

government argued that there was no constitutional

violation, because private carriers had a choice. The

Court rejected the illusory choice, reasoning that

although with “regard to form alone, the act here is

an offer to the private carrier of a privilege, which the

state may grant or deny, upon a condition which the

carrier is free to accept or reject,” but “[i]n reality, the

carrier is given no choice, except a choice between the

rock and the whirlpool--an option to forego a privilege

which may be vital to his livelihood or submit to a

requirement which may constitute an intolerable

burden.” Id. at 593.

-8A similar reality is present here. The government

claims “no constitutional violation, because

manufacturer’s have a choice.” But the choice is not

voluntary—it’s the rock or the whirlpool—and thus

no choice at all.

B. The Program Must Be Evaluated Under

the Law Concerning Consensual

Agreements.

If, as the Third Circuit concluded, the agreements

are ordinary commercial contracts, then these

agreements and the Program must be evaluated

under the law concerning consensual agreements.

When looked at from this angle, the constitutional

infirmity of the Program is clear.

It is true that the government is not obligated to

contract with a specific individual or entity. The

government can choose to enter or leave a market or

form a contract with one entity but not another. But

when it does enter a market and form contracts, it is

not identical to other, solely private entities. Instead,

it is constrained by the Constitution in ways that

private entities are not.

For example, federalism principles dictate that

the federal government cannot coerce “a State to

adopt a federal regulatory system as its own.” Nat’l

Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 577–78

(2012) (“NFIB”). This is a structural limitation on the

power of the federal government mandated by the

Constitution.

Likewise, under the First Amendment nocompelled-speech doctrine, the government cannot

compel a “grant recipient to adopt a particular belief

as a condition of funding.” Agency for Int’l Dev. v. All.

-9for Open Soc’y Int’l, Inc., 570 U.S. 205, 218 (2013)

(“AID”). If the federal government cannot compel

speech in exchange for grant funding, then it logically

follows that it cannot compel speech in exchange for

a government contract.

The key here is that simply calling a condition a

contractual term or part of an ordinary agreement

between two free entities—manufacturers on the one

hand, and the government on the other—does not

solve the constitutional problem. Columbia Law

School professor Philip Hamburger rightly rejects the

argument that “what government does in its private

capacity (notably, purchasing) is not confined by the

constitutional limits on what it does in its public or

governmental capacity (such as regulation),” because

“the Constitution’s provisions for legislative and

judicial powers and its guarantees of rights do not

come with an exception for whatever the government

can characterize as done in its contractual or

otherwise private capacity.” Philip Hamburger,

Purchasing Submission: Conditions, Power, and

Freedom 63 (2021). Instead, “the Constitution limits

government generally, without any such exception.”

Id.

In other words, just as the government cannot, by

regulation, require a person or entity to give up a

constitutional right in exchange for a discretionary

benefit, see Dolan v. City of Tigard, 512 U.S. 374, 385

(1994), neither can it evade constitutional limitations

through supposed contractual consent. Simply put,

the “government may not do indirectly what it may

not

do

directly,”

Kathleen

M.

Sullivan,

Unconstitutional Conditions, 102 Harv. L. Rev. 1413,

- 10 1415 (1989), whether

contractual conditions.

through

regulatory

or

At the very least, “[w]hen the government

employs private consensual arrangements to evade

the Constitution’s limits on public power, the

government should . . . be subject to the law

regarding consensual arrangements.” Burger, supra

at 217. As relevant here, consensual agreements may

be found void or voidable by undue influence or

because they are against public policy.

1. The Agreements Are Voidable Because

of Undue Influence.

A contract or other consensual agreement may be

void on account of undue influence. Hamburger,

supra at 213. This is basic black letter law. See, e.g.,

Taylor v. Bemiss, 110 U.S. 42, 45 (1884); Black’s Law

Dictionary (“Consent either to conduct or to a

contract, transaction, or relationship is voidable if

the consent is obtained through undue influence.”);

17A C.J.S. Contracts § 260 (“Undue influence

invalidates contracts obtained thereby, although

such contracts are subject to subsequent

ratification.”).

Although “undue influence is notoriously difficult

to reduce to a simple rule,” it is “apt to be found where

one party is overbearing in relation to another[.]”

Hamburger, supra at 213. Black’s Law Dictionary

defines “undue influence” as the “improper use of

power or trust in a way that deprives a person of free

will and substitutes another’s objective; the exercise

of enough control over another person that a

questioned act by this person would not have

otherwise been performed, the person’s free agency

- 11 having been overmastered.” (emphasis added).

Although the concept is not “susceptible of unitary

definition,” nonetheless the “essence of the idea is the

subversion of another person’s free will in order to

obtain assent to an agreement.” Francois v. Francois,

599 F.2d 1286, 1292 (3d Cir. 1979). “The proper

inquiry is not just whether persuasion induced the

transaction but whether the result was produced by

the domination of the will of the victim by the person

exerting undue influence.” Id.

If, as argued by the government (and as concluded

by the Third Circuit), the Program’s agreements are

ordinary commercial contracts, they are void under

the doctrine of undue influence. Consider the

following relevant facts:



The legislature enacted Medicare, which is

now the largest federal drug benefit program,

covering “nearly 60 million aged or disabled

Americans.” Azar v. Allina Health Servs., 87

U.S. 566, 569 (2019);



The federal government “dominates” the U.S.

prescription drug market, accounting “for

almost half the annual nationwide spending

on prescription drugs.” Sanofi Aventis U.S.

LLC v. HHS, 58 F.4th 696, 699 (3d Cir. 2023);3

Notably, “[t]he maximum fair prices set by CMS will have

effects far beyond Medicare. State Medicaid programs follow a

‘best price’ that sets Medicaid prices at the lowest available to

any U.S. entity, including Medicare. Many private insurers

provide prescription drug coverage to Medicare Part D

beneficiaries and will also look to the maximum fair prices for

their non-Medicare subscribers.” Daniel E. Orr, Congress Must

Fix the Inflation Reduction Act Before Millions Lose Treatment

for Rare Diseases, 42 Yale L. & Pol’y Rev. 1, 6 (2023).

3

- 12 

When it enacted Medicare Part D (and until it

enacted the Program) Congress expressly

prohibited

the

Government

from

“interfere[ing] with the negotiations between

drug manufacturers and pharmacies and

[private plan sponsors].” 42 U.S.C. § 1395w111(i);



Manufacturers reasonably rely on patents and

receiving fair market prices to recoup the

investment costs of bringing a new drug to

market, which on average is more than $2

billion;4



A manufacturer can either sign the agreement

to negotiate and agree to a “maximum fair

price” below the fair market value, or a) pay

substantial excise taxes, b) divest itself of the

selected drug, c) withdraw all of its drugs from

federal healthcare programs, or d) pay

extensive civil penalties.

These facts establish that the aim of the Program

is “subversion of another person’s free will in order to

obtain assent to an agreement.” Francois, 599 F.2d at

1292. Without the inherent—and intentional—

coerciveness of the Program, manufacturers would

never sign the Program’s agreements. See Kentucky

v. Biden, 23 F.4th 585, 595–96 (6th Cir. 2022) (“The

federal government of course knows that these

reliance interests exist, which is why it seeks to

Stephen

Ezell,

Ensuring

U.S.

Biopharmaceutical

Competitiveness, Info. Tech. & Innovation Found. 30 (July 2020),

https://www2.itif.org. One economic analysis “predicts that

because of IRA price controls, 40% fewer new drugs will come to

market by 2035.” Orr, supra at 8.

4

- 13 purchase states’ submission by leveraging those

interests to force their acquiescence to the contractor

mandate.”) (citing Hamburger, supra at 18).

NFIB is instructive. The Court emphasized that it

has “repeatedly characterized . . . Spending Clause

legislation as ‘much in the nature of a contract.’”

NFIB, 567 U.S. at 576–77 (quoting Barnes v.

Gorman, 536 U.S. 181, 186 (2002) and Pennhurst

State School and Hospital v. Halderman, 451 U.S. 1,

17 (1981)). “The legitimacy of Congress’s exercise of

the spending power thus rests on whether the State

voluntarily and knowingly accepts the terms of the

‘contract.’” Id. at 577 (quotation omitted). Treating

Spending Clause legislation as akin to a contract has

led the Court “to scrutinize Spending Clause

legislation to ensure that Congress is not using

financial inducements to exert a ‘power akin to undue

influence.’” Id. (quoting Steward Machine Co. v.

Davis, 301 U.S. 548, 590 (1937)). Although “Congress

may use its spending power to create incentives for

States to act in accordance with federal policies,” if

“pressure turns into compulsion . . . the legislation

runs contrary to our system of federalism.” Id.

(quotation omitted).

Admittedly, NFIB concerned Spending Clause

legislation that coerced State participation in

Medicare, whereas here the Spending Clause

legislation involves the coercion of private entities.

The federalism principles at play in NFIB are thus

not relevant here. Nonetheless, the case and the

principles enunciated there are analogous. Both

concern the Spending Clause, government health

insurance programs, and alleged undue influence. If

threatening a mere ten percent of states’ budgets

- 14 constitutes undue influence—or, as the Supreme

Court quipped, “a gun to the head,” NFIB, 567 U.S.

at 581—then it reasonably follows that a threat to

ban a manufacturer from fifty percent of the

prescription drug market passes the point “at which

pressure turns into compulsion.” Id. (quotation

omitted).

The agreements vital to the Program are voidable

as obtained by undue influence. Because the

constitutionality of the Program rests on the alleged

voluntariness of the agreements, but the agreements

themselves are unenforceable, this Court should

strike down the law.

2. The Agreements Are Void as Against

Public Policy.

In addition to undue influence, a contract or

agreement against public policy is void and

unenforceable. Hamburger, supra at 214; see also

Oubre v. Entergy Operations, Inc., 522 U.S. 422, 431–

32 (1998) (Breyer, J. concurring) (stating that a

contract against “law or public policy” is void); Evans

v. Jeff D., 475 U.S. 717, 759 (1986) (Brennan, J.,

dissenting)

(discussing

the

“well-established

principle that an agreement which is contrary to

public policy is void and unenforceable”) (citing

cases). This doctrine is “firmly rooted in precedents

accumulated over centuries.” 2 E. Allan Farnsworth,

Farnsworth on Contracts 910 n. 4 (3d ed. 2004). The

Constitution trumps any other claimed “public

policy” asserted by the government, such as the policy

to lower prescription drug costs or provide affordable

health insurance to seniors. As Professor Hamburger

notes, “the Constitution is a public policy that rises

- 15 above mere conditions, whether stipulated by

Congress or agencies.” Hamburger, supra at 216. In

other words, a contract that impairs constitutional

rights is against public policy and void: “the

Constitution protects rights such as the freedom of

speech, and it is against the Constitution’s public

policy for the government to use conditions to impose

restrictions that abridge the freedom of speech or

other constitutional rights.” Id. at 216–17.

This seemingly obvious premise—that the

government cannot evade the Constitution through

contract or agreement because such agreements are

void (not simply voidable) as against public policy—

nonetheless is often ignored by the government:

On the theory that conditions are

merely consensual arrangements, the

government has gone far in unraveling

much of the Constitution’s structures

and its protections for freedom,

including its rights. This is a profound

danger, and it is therefore essential to

recognize that the law itself addresses

this

threat

from

consensual

transactions.

Hamburger, supra at 217.

What Professor Hamburger highlights in this

passage is precisely what the government tries to do

here. The government makes the claim that

participation in Medicare is voluntary, and therefore

there is no constitutional problem with the Program.

But the voluntariness of an agreement against public

policy is irrelevant. Id. at 216. If a condition to an

agreement is unconstitutional, the agreement is void.

- 16 The government wants to have its cake and eat it

too. On the one hand, it treats the Program’s

agreements as ordinary and voluntary commercial

contracts. But on the other hand, it does not apply

the basic rules of the law controlling consensual

transactions, including the doctrines invalidating

agreements formed by undue influence or those

against public policy.

As this Court has repeatedly said, “[e]ven though

government is under no obligation to provide a

person, or the public, a particular benefit, it does not

follow that conferral of the benefit may be

conditioned on the surrender of a constitutional

right.” Liquormart, Inc. v. Rhode Island, 517 U.S.

484, 513 (1996). This applies if the particular benefit

at issue is an agreement or contract with the

government. The government is under no obligation

to contract with a person or a particular company,

but it does not follow that the conferral of a contract

may be conditioned on the surrender of a

constitutional right.

Consider the consequences if it could be. The

government could establish a caste society, one in

which the government could purchase the surrender

of an individual’s or corporation’s constitutional

rights, with devastating consequences. See Philip

Hamburger, Unconstitutional Conditions: The

Irrelevance of Consent, 98 Va. L. Rev. 479, 490 (2012)

(“government by contract tends to create an unofficial

caste system, which offers the formalities of equal

freedom, but which actually deprives the financially

weak of their liberty, thus reinforcing financial

vulnerabilities with legal inequalities”).

- 17 A world in which the government could evade the

structure and limits of the Constitution through

coercive agreements is not one imagined by the

Founders. Indeed, resistance to government coercion

was at the center of the founding. See Thomas C.

Grey, Origins of the Unwritten Constitution:

Fundamental Law in American Revolutionary

Thought, 30 Stan. L. Rev. 843, 885 (1978) (arguing

that Britian’s Coercive Acts of 1774 “led to the calling

of the First Continental Congress in 1774, to the

arming of the backcountry men of Massachusetts,

and thence to Lexington and Concord, Bunker Hill,

and war”).

That the government “has broad powers,” cannot

seriously be disputed. Horne v. Dep’t of Agric., 576

U.S. 350, 362 (2015). Nonetheless, “the means it uses

to achieve its ends must be ‘consist[ent] with the

letter and spirit of the constitution.’” Id. (quoting

McCulloch v. Maryland, 4 Wheat. 316, 421, 4 L.Ed.

579 (1819)). The Court should reject the

government’s argument that it can evade

constitutional norms through the means of alleged

voluntary agreements.

II. The Program Violates Both the Fifth and

First Amendments.

A. The Program Is a Fifth Amendment

Takings.

“Government action that physically appropriates

property is no less a physical taking because it arises

from a regulation.” Cedar Point Nursery v. Hassid,

594 U.S. 139, 149 (2021); Horne v. Dep’t of Agric., 576

U.S. 350, 361 (2015) (same). The question in a per se

taking case is “whether the government has

- 18 physically taken property for itself or someone else—

by whatever means—or has instead restricted a

property owner’s ability to use his own property.” Id.

Under Horne, the government cannot require a

raisin grower to set aside a certain percentage of its

crop for government use without just compensation.

576 U.S. at 354. Under Cedar Point Nursery, the

government cannot require an employer to grant a

labor organization the “right to take access” to the

employer’s property to solicit support for

unionization. 594 U.S. at 143. The Program here

combines the constitutional flaws in Horne and

Cedar Point Nursery. First, it requires drug

manufacturers to set aside a portion of selected drugs

to later be dispensed and administered to Medicare

recipients at below fair market value (i.e., without

just compensation). As in Horne, the prescription

drug companies will receive some compensation, but

at below fair market value. Thus, a Fifth Amendment

takings has occurred.

Second,

the

Program

requires

drug

manufacturers to “provide access to a price that is

equal to or less than the maximum fair price for such

drug” to Medicare recipients and to pharmacies,

hospitals, physicians, and others who dispense the

drug to Medicare recipients. 42 U.S. Code §§ 1320f–

2(a)(1)(A)-(B), 1320f-6(a). Providing “access to a

price” is no different than being required to provide

access to a prescription drug (or access to raisins or

space in a barn). The product comes with the price.

There can be no price without a product. By requiring

“access to a price” that is below fair market value, the

government is requiring drug companies to sell

selected drugs without just compensation.

- 19 Notably, the Program’s access provision has

nearly identical language to the regulation in Cedar

Point Nursery, which appropriated “a right to

physically invade the growers’ property—to literally

‘take access.’” 594 U.S. at 152 (quoting the California

regulation). Under Cedar Point Nursery, there can be

no dispute that providing “access” to a prescription

drug implicates the Fifth Amendment.

Means are important. “The Constitution . . . is

concerned with means as well as ends.” Id. at 152

(quoting Horne). When the government physically

takes property for itself or someone else “by whatever

means,” it violates the Fifth Amendment. Id. at 149

(emphasis added). The means the government

employs here are no more constitutional than the

means employed in Horne and Cedar Point Nursery.

And again, the alleged voluntariness of the

Program does not save it. This Court held as much in

Horne. In response to the government’s contention

that farmers could avoid the regulation by growing

another crop (or selling their land), the Court noted

that “[t]he taking here cannot reasonably be

characterized as part of a . . . voluntary exchange.”

Horne, 576 U.S. at 366. The same reasoning applies

here.

B. The Program Violates the No-CompelledSpeech Doctrine.

1. The Compelled Speech is Not

Incidental to Regulated Conduct.

The Program here compels speech, not just

commercial conduct. The Third Circuit’s reliance on

Rumsfeld v. F. for Acad. & Institutional Rts., Inc. to

- 20 conclude otherwise is misplaced. 547 U.S. 47 (2006).

The Program mandates speech that cannot be

characterized “conduct.”

In Rumsfeld, the Court analyzed a restriction on

conduct. In response to law schools restricting the

access of military recruiters to law students because

of disagreement with the Government’s policy on

homosexuals in the military, Congress enacted the

Solomon Amendment, which denied federal funding

to institutions of higher education that denied

military recruiters access equal to that provided

other recruiters. Id. at 51. This Court concluded that

“the Solomon Amendment regulates conduct, not

speech,” and “affects what law schools must do—

afford equal access to military recruiters—not what

they may or may not say.” Id. at 60. Further, the

amendment “neither limits what law schools may say

nor requires them to say anything.” Id. at 60

(emphasis added). Although the Court recognized

that “recruiting assistance provided by the schools

often includes elements of speech,”—e.g., sending

emails or posting notices on bulletin boards—the

Court concluded this sort of recruiting assistance “is

plainly incidental to the Solomon Amendment’s

regulation of conduct.” Id. at 61–62 (emphasis

added).

The Program at issue here is distinguishable from

the Amendment at issue in Rumsfeld. Unlike the

Amendment, the Program does mandate speech.

Drug manufacturers must affirm that the price at

which they must sell their product is the “maximum

fair price.” The government knows the American

public does not support stunting research and

development of new, lifesaving medications by

- 21 capping the sale of patented drugs. The government

therefore developed a scheme whereby it could

effectively cap its spending (and also avoid possible

tax increases) by compelling drug manufacturers to

“negotiate,” agree, and affirm that they are selling

their valuable products at the “maximum fair

price”—which is not constitutionally permissible. If

the Program simply required manufacturers to

negotiate with the government in good faith under

the same terms and conditions it negotiates with

private insurers, that would be different.

Rather than Rumsfeld, the more analogous case is

Expressions Hair Design v. Schneiderman, 581 U.S.

37 (2017). There, the Court considered whether a

New York law that forbade merchants from imposing

a surcharge for the use of a credit card regulates

speech, or only commercial conduct. Id. at 39. The

Court held that the law did regulate speech,

reasoning that it was different than typical price

regulation, which simply regulates the amount that

a store can collect and that only “indirectly dictate the

content of that speech.” Id. at 47 (emphasis added).

By contrast, New York’s law regulated “how sellers

may communicate their prices.” Id.

The Program does both here, regulating not only

the price of certain prescription drugs, but also

directly regulating how manufacturers may

communicate about their prices. Specifically,

manufacturers must affirm that the price for their

prescription drugs are the result of negotiations and

an agreement between the manufacturer and the

government for the maximum fair price. Expressions

Hair Design not Rumsfeld should guide this Court’s

analysis.

- 22 2. The Program Unconstitutionally

Compels Viewpoint-Based Speech.

Compelling manufacturers to describe the nonvoluntarily imposed price as a “maximum fair price”

means that the manufacturers can’t say what they

believe: that the Program and the resulting price is

not meaningfully fair. Moreover, it makes the

manufacturers imply that their previous charged

prices were not fair. This implies past malfeasance, a

dangerous thing for a company to say at a time when

many people believe that greed and unfair practices

are the guiding principles of many large companies,

especially drug manufacturers.

“Speech compulsions, the Court has often held,

are as constitutionally suspect as are speech

restrictions.” Eugene Volokh, The Law of Compelled

Speech, 97 Tex. L. Rev. 355, 355 (2018). Although

there are various categories of compelled-speech

cases, the most egregious violation of the nocompelled-speech doctrine is when the government

compels viewpoint-based speech; indeed, “[t]he

Supreme Court has never upheld a viewpoint

compulsion of speech.” Richard F. Duncan, Viewpoint

Compulsions, 61 Washburn L.J. 251, 272–73 (2022).

As shown by Professor Volokh, “Government coercion

is presumptively unconstitutional . . . when it

compels people to speak things they do not want to

speak.” Volokh, supra at 368–70; see, e.g., Nat’l Inst.

of Fam. & Life Advocs. v. Becerra, 585 U.S. 755, 766

(2018) (holding that a compelled-notice provision “is

a content-based regulation of speech” because “[b]y

compelling individuals to speak a particular

message, such notices alter the content of their

speech”) (cleaned up).

- 23 The Court’s three most relevant compelled-speech

cases are W. Virginia State Bd. of Educ. v. Barnette,

319 U.S. 624 (1943), Wooley v. Maynard, 430 U.S. 705

(1977), and Agency for Int’l Dev. v. All. for Open Soc’y

Int’l, Inc., 570 U.S. 205 (2013) (“AID”). These cases

prohibit the government from compelling speech as a

condition of a government privilege. In Barnette, the

Court held that schoolchildren could not be required

to pledge allegiance to the flag because “compulsion

. . . to declare a belief” unconstitutionally compelled

“affirmation of a belief and an attitude of mind.” Id.

at 631–33. In Wooley, the Court concluded that New

Hampshire could not compel drivers to display the

state motto—“Live Free or Die”—on their vehicle

license plates. 430 U.S. at 717. The Court reasoned

that the Constitution forbade making this display “a

condition to driving an automobile,” which is “a

virtual necessity for most Americans.” Id. at 715.

Finally, in AID, the Court struck a federal law

requiring the recipient of federal HIV/AIDS funding

to affirm that it “is opposed to ‘prostitution and sex

trafficking because of the psychological and physical

risks they pose for women, men, and children.” 570

U.S. at 210. The Court stated that the case was “not

about the Government’s ability to enlist the

assistance of those with whom it already agrees,” but

“about compelling a grant recipient to adopt a

particular belief as a condition of funding.” 570 U.S.

at 218.

These cases reveal that the government cannot

compel speech—speech which conveys a particular

viewpoint—by making the speech a condition on

receipt of a benefit. But that’s exactly what the

Program requires pharmaceutical companies to do

- 24 here. To obtain the benefit of selling to Medicare

recipients, drug companies are compelled to make

statements that they don’t agree with, including that

the “maximum fair price” of their drug is less than its

fair market value—implying that the price the

company sold its drugs at prior to the Program was

not fair.

It is hard to see how this case differs from AID in

any material respect. AID concerned billions of

dollars in government aid; the Program concerns

billions of dollars in government spending on

Medicare. The regulation in AID required that the

recipient of any funding under the Act agree in the

funding agreement—which could be a “contract,” 45

C.F.R. § 89.1, subd. a—that it is opposed to

prostitution and sex trafficking. The agreement

giving pharmaceutical companies access to the

government-sponsored health insurance market

requires them to affirm that a drug is being sold at

its “maximum fair price.” And notably, both AID and

this case involve political optics. In AID, the

government wanted funding recipients “to adopt a

similar stance” to the government’s purpose of

eradicating prostitution and sex trafficking. 570 U.S.

at 218. “By demanding that funding recipients

adopt—as their own—the Government’s view on an

issue of public concern,” the program by its very

nature affected “protected conduct outside the scope

of the federally funded program.” Id. (quotation

omitted). So too here. The government didn’t simply

set prices in a take it or leave it manner. Instead, it

aimed to commandeer the companies’ mouthpieces in

order to spread the government’s view on Medicare

drug pricing, a matter of clear public concern.

- 25 As in AID, were the agreements “enacted as a

direct regulation of speech,” they “would plainly

violate the First Amendment.” Id. at 213. And as in

AID, the Government may not evade the Constitution

by imposing that requirement as a condition on the

receipt of federal funds.

CONCLUSION

For the foregoing reasons and the reasons stated

in petitioners’ briefs, the Court should grant the

petitions for writ of certiorari and reverse the decision

below.

Respectfully submitted,

NELSON MULLINS RILEY

& SCARBOROUGH LLP

/s/ Jeffrey A. Wald

Jeffrey A. Wald

Counsel of Record

380 Knollwood Street, Suite 530

Winston-Salem, NC 27103

336-774-3335

jeffrey.wald@nelsonmullins.com

C. Mitchell Brown

1320 Main Street, 17th Floor

Columbia, SC 29201

- 26 MANHATTAN INSTITUTE

Trevor Burrus

Ilya Shapiro

52 Vanderbilt Ave.

New York, NY 10017

Counsel for Amicus Curiae

Manhattan Institute