Petition for Writ of Certiorari — Novartis Pharmaceuticals Corporation, Petitioner v. Robert F. Kennedy, Secretary of Health and Human Services, et al.

Supreme Court briefJan 23, 2026

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No. ______

In the

Supreme Court of the United States

NOVARTIS PHARMACEUTICALS CORP.,

Petitioner,

SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

SAMIR DEGER-SEN

S.Y. JESSICA HUI

NIKITA KANSRA

LATHAM & WATKINS LLP

1271 Avenue of the

Americas

New York, NY 10020

GREGORY G. GARRE

Counsel of Record

DANIEL MERON

CHRISTINA R. GAY

LATHAM & WATKINS LLP

555 11th Street, NW

Suite 1000

Washington, DC 20004

(202) 637-2207

gregory.garre@lw.com

Counsel for Petitioner

QUESTIONS PRESENTED

The Drug Price Negotiation Program (Program)

threatens enterprise-destroying fines unless a drug

manufacturer both provides its products at

government-dictated prices and publicly declares that

those coerced prices are “fair.” The fines at the root of

the law are unprecedented in scope—for petitioner

Novartis, they would swiftly escalate to $93.1 billion

annually. The Third Circuit declined even to address

whether this extraordinary penalty was excessive

under the Eighth Amendment, because it found that

the Anti-Injunction Act (AIA) divests federal court

jurisdiction over any challenge to a civil penalty

unconnected to criminal conduct so long as Congress

labels it a tax. The court then concluded that the

coerced transfers did not reflect an unconstitutional

taking because they were “voluntary,” and that the

compelled speech at issue did not implicate the First

Amendment because it was merely “incidental” to the

regulation of conduct.

Each holding involves

constitutional questions of first-order importance.

The questions presented are:

1. Whether the AIA bars review of any challenge

under the Excessive Fines Clause of a civil penalty

unconnected to criminal conduct whenever Congress

labels it a tax, even when it is effectively unpayable.

2. Whether the Program violates the Fifth

Amendment by forcing manufacturers to transfer

drugs to third parties at government-dictated prices.

3. Whether the Program violates the First

Amendment by coercing manufacturers into

expressing the government’s preferred viewpoints on

matters of public concern with which the

manufacturers disagree.

RULE 29.6 STATEMENT

Pursuant to Supreme Court Rule 29.6, petitioner

Novartis Pharmaceuticals Corporation (Novartis)

makes the following disclosures: Novartis is a direct,

wholly owned subsidiary of Novartis Finance

Corporation, a New York corporation; and Novartis is

an indirect, wholly owned subsidiary of Novartis AG,

a Swiss company. No other publicly held corporation

owns 10% or more of Novartis’s stock.

iii

PARTIES TO THE PROCEEDINGS BELOW

Petitioner Novartis was the plaintiff in the district

court and the appellant in the court of appeals.

Respondents the Secretary of the United States

Department of Health and Human Services;

Administrator of the Centers for Medicare &

Medicaid Services; the United States Department of

Health and Human Services; and Centers for

Medicare & Medicaid Services were the defendants in

the district court and the appellees in the court of

appeals. Respondents the Secretary United States

Department of the Treasury; the United States

Department of the Treasury; the Commissioner

Internal Revenue Service; and the Internal Revenue

Service were added as defendants to this action in the

court of appeals.

RELATED PROCEEDINGS

There are no proceedings directly related to this

case within the meaning of Rule 14.1(b)(iii).

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ....................................... i

RULE 29.6 STATEMENT.......................................... ii

PARTIES TO THE PROCEEDINGS BELOW ......... iii

RELATED PROCEEDINGS ..................................... iii

TABLE OF AUTHORITIES .................................... vii

OPINIONS BELOW ....................................................1

JURISDICTION ..........................................................1

INTRODUCTION .......................................................1

STATEMENT OF THE CASE ....................................6

A. Legal Background ........................................6

B. Factual And Procedural Background ........11

REASONS FOR GRANTING THE WRIT................15

THE DECISION BELOW WRONGLY

EXCUSES

CONSTITUTIONAL

VIOLATIONS OF AN EXTRAORDINARY

MAGNITUDE ...................................................15

A. The

Anti-Injunction

Act

Holding

Warrants This Court’s Review...................16

B. The

Fifth

Amendment

Holding

Warrants This Court’s Review...................22

C. The First Amendment Holding Warrants

This Court’s Review ...................................27

TABLE OF CONTENTS—Continued

Page

D. The Combination Of These Three

Constitutional Violations Makes This

Case Uniquely Important ..........................32

II.

THE COURT’S REVIEW IS NEEDED

NOW ..................................................................33

CONCLUSION ..........................................................37

APPENDIX

Opinion of the United States Court of Appeals

for

the

Third

Circuit,

Novartis

Pharmaceuticals Corp. v. Secretary United

States Department of Health & Human

Services, 155 F.4th 223 (3d Cir. 2025) ...............1a

Order of the United States District Court for

District of New Jersey, Novartis

Pharmaceuticals Corp. v. Becerra, No.

23-14221, 2024 WL 4524357 (D.N.J. 2024),

ECF No. 79 ........................................................18a

Opinion of the United States Court of Appeals

for the Third Circuit, Bristol Myers Squibb

Co. v. Secretary, United States Department

of Health & Human Services, 155 F.4th 245

(3d Cir. 2025) ....................................................30a

26 U.S.C. § 5000D .................................................111a

26 U.S.C. § 7421 ....................................................116a

42 U.S.C. § 1320f(a)-(c)(3) .....................................117a

42 U.S.C. § 1320f-1(a)-(b)(1) .................................120a

42 U.S.C. § 1320f-2(a)-(b) ......................................123a

TABLE OF CONTENTS—Continued

Page

42 U.S.C. § 1320f-3(a)-(c), (e) ................................127a

42 U.S.C. § 1320f-6................................................137a

42 U.S.C. § 1395w-114a(b)(4)(B)(i)-(ii) .................139a

42 U.S.C. § 1395w-114c(b)(4)(B)(i)-(ii) .................141a

vii

TABLE OF AUTHORITIES

Page(s)

CASES

Agency for International Development v.

Alliance for Open Society International,

Inc.,

570 U.S. 205 (2013) ........................................31, 32

Austin v. United States,

509 U.S. 602 (1993) ..........................................3, 19

Bob Jones University v. Simon,

416 U.S. 725 (1974) ..............................................17

CIC Services, LLC v. IRS,

593 U.S. 209 (2021) ..............................................22

Enochs v. Williams Packing & Navigation

Co.,

370 U.S. 1 (1962) ............................................14, 17

Expressions Hair Design v. Schneiderman,

581 U.S. 37 (2017) ..........................................29, 30

Grant ex rel. United States v. Zorn,

107 F.4th 782 (8th Cir. 2024) ..............................20

Grashoff v. Adams,

65 F.4th 910 (7th Cir. 2023) ................................20

Horne v. Department of Agriculture,

576 U.S. 351 (2015) ........................................24, 25

viii

TABLE OF AUTHORITIES—Continued

Page(s)

Janus v. American Federation of State,

County, & Municipal Employees,

Council 31,

585 U.S. 878 (2018) ..............................................28

National Association of Manufacturers v.

SEC,

800 F.3d 518 (D.C. Cir. 2015) ..............................30

National Infusion Center Association v.

Becerra,

116 F.4th 488 (5th Cir. 2024) ..........................9, 10

Nicopure Labs, LLC v. FDA,

944 F.3d 267 (D.C. Cir. 2019) ..............................29

Rust v. Sullivan,

500 U.S. 173 (1991) ..............................................31

Sessions v. Dimaya,

584 U.S. 148 (2018) ..............................................36

Toth v. United States,

143 S. Ct. 552 (2023)............................................21

United States v. Mackby,

261 F.3d 821 (9th Cir. 2001)................................20

United States v. Schwarzbaum,

127 F.4th 259 (11th Cir. 2025) ............................20

United States v. Toth,

33 F.4th 1 (1st Cir. 2022).....................................20

TABLE OF AUTHORITIES—Continued

Page(s)

United States ex rel. Behnke v. CVS

Caremark Corp.,

No. 14-cv-824, 2024 WL 1416499 (E.D.

Pa. Apr. 2, 2024) ....................................................7

United States ex rel. Drakeford v. Tuomey,

792 F.3d 364 (4th Cir. 2015)................................20

STATUTES

26 U.S.C. § 5000D .......................................................2

26 U.S.C. § 5000D(a) ...................................................8

26 U.S.C. § 7421(a)................................................2, 21

28 U.S.C. § 1254(1)......................................................1

42 U.S.C. § 1320f(b) ..................................................11

42 U.S.C. § 1320f(c)(2) ........................................11, 28

42 U.S.C. § 1320f(d) ..................................................11

42 U.S.C. § 1320f(d)(2)(A) ...........................................8

42 U.S.C. § 1320f(d)(5)(C) .........................................10

42 U.S.C. § 1320f-1(a) ...............................................35

42 U.S.C. § 1320f-1(a)(1) .............................................8

42 U.S.C. § 1320f-1(a)(4) .............................................8

42 U.S.C. § 1320f-1(b)(1)(A) ........................................8

42 U.S.C. § 1320f-2(a) ...........................................8, 11

TABLE OF AUTHORITIES—Continued

Page(s)

42 U.S.C. § 1320f-2(a)(1) ........................... 2, 10, 11, 28

42 U.S.C. § 1320f-3(b) ...............................................11

42 U.S.C. § 1320f-3(b)(1) ...........................................10

42 U.S.C. § 1320f-3(b)(2) .............................................9

42 U.S.C. § 1320f-3(b)(2)(C)(ii) ...................................9

42 U.S.C. § 1320f-3(b)(2)(E) ......................................10

42 U.S.C. § 1320f-3(b)(2)(F) ......................................10

42 U.S.C. § 1320f-3(b)(2)(F)(ii) ...................................9

42 U.S.C. § 1320f-3(c) ..................................................9

42 U.S.C. § 1320f-3(c)(1)(A) ......................................10

42 U.S.C. § 1320f-3(e) .................................................9

42 U.S.C. § 1320f-6(a) ...............................................11

42 U.S.C. § 1320f-6(b) ...............................................11

42 U.S.C. § 1320f-7......................................................9

42 U.S.C. § 1395k(a) ...................................................6

42 U.S.C. § 1395w-3a ..................................................7

42 U.S.C. § 1395w-111(i).............................................7

42 U.S.C. § 1395w-114a(b)(4)(B)(ii) ......................9, 26

42 U.S.C. § 1395w-114c(b)(4)(B)(ii) ......................9, 26

TABLE OF AUTHORITIES—Continued

Page(s)

42 U.S.C. § 1395x(s)(2)(A) ...........................................6

OTHER AUTHORITIES

Jessica L. Asbridge, Fines, Forfeitures, and

Federalism, 111 Va. L. Rev. 67 (2025) ................20

CBO, Cost Estimate, Estimated Budgetary

Effects of Public Law 117-169, to Provide

for Reconciliation Pursuant to Title II of

S. Con. Res. 14 (Sept. 7, 2022),

https://www.cbo.gov/system/files/202209/PL117-169_9-7-22.pdf. ..............................10, 34

CBO, Prescription Drug Pricing Reduction

Act of 2019 (July 24, 2019),

https://www.cbo.gov/system/files/201907/PDPRA_preliminary_estimate.pdf.................33

CMS, Medicare Drug Price Negotiation

Program: Negotiated Prices for Initial

Price Applicability Year 2027 (Nov.

2025), https://www.cms.gov/files/

document/fact-sheet-negotiated-pricesipay-2027.pdf........................................................34

Greg Licholai, Inflation Reduction Act

Unintended Consequences For Medical

Innovation, Forbes (Feb. 3, 2025),

https://www.forbes.com/sites/greglicholai

/2025/02/03/inflation-reduction-actunintended-consequences-for-medicalinnovation/ ...........................................................36

xii

TABLE OF AUTHORITIES—Continued

Page(s)

Press Release, CMS, HHS Announces 15

Additional Drugs Selected for Medicare

Drug Price Negotiations in Continued

Effort to Lower Prescription Drug Costs

for Seniors (Jan. 17, 2025),

https://www.cms.gov/newsroom/pressreleases/hhs-announces-15-additionaldrugs-selected-medicare-drug-pricenegotiations-continued-effort-lower ....................34

Erica York, Inflation Reduction Act’s Price

Controls Are Deterring New Drug

Development, Tax Foundation (Apr. 26,

2023), https://taxfoundation.org/blog/

inflation-reduction-act-medicareprescription-drug-price-controls/.........................35

PETITION FOR A WRIT OF CERTIORARI

Novartis respectfully petitions for a writ of

certiorari to review the judgment of the United States

Court of Appeals for the Third Circuit in this case.

OPINIONS BELOW

The court of appeals’ opinion (App.1a-17a) is

available at 155 F.4th 223. The district court’s

opinion (App.18a-29a) is available at 2024 WL

4524357.

JURISDICTION

The court of appeals entered judgment on

September 11, 2025 (App.1a-17a). On November 20,

2025, Justice Alito extended the date to file a petition

for a writ of certiorari to January 9, 2026. On

December 11, 2025, Justice Alito further extended the

date to file a petition to January 23, 2026. This Court

has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

Relevant provisions are

Appendix. App.111a-42a.

reproduced

the

INTRODUCTION

This case involves a challenge to Congress’s

unprecedented attempt to radically reshape the

Nation’s $600-billion prescription-drug market by

forcing pharmaceutical companies to turn over their

drugs at prices far below market levels on threat of

enterprise-crippling fines labeled as a “tax” that raise

no revenue at all. No one questions Congress’s

authority to address the cost of prescription drugs.

But as with any subject, the Constitution places

important limits on the means Congress can use.

Here, Congress’s program not only crosses numerous

constitutional red lines, but also, if allowed to stand,

will adversely affect the health of tens of millions of

Americans by impacting the healthcare available to

them. This Court’s immediate intervention is needed.

In August 2022, Congress enacted the “Drug Price

Negotiation Program” (Program), as part of the

Inflation Reduction Act (IRA).

Contrary to its

Orwellian name, the “Negotiation Program” does not

involve any true negotiation. Rather, it operates as a

sledgehammer. It threatens manufacturers with

seismic fines unless they submit to a performative

process in which they first publicly state that the

government-dictated prices are the “maximum fair

price” for their drugs—essentially forcing the

companies to denounce their own earlier prices as

unfair—and then hand over their most innovative

and widely used products at prices far beneath

market values. 42 U.S.C. § 1320f-2(a)(1). The

penalties underlying the Program run up to nineteen

times a manufacturer’s total nationwide revenues

from the sale of the drug—representing dollar fines

that are, by design, unpayable.

Congress branded this extraordinary penalty as a

“tax” in a brazen attempt to insulate this penalty

scheme from judicial review under the AntiInjunction Act (AIA), which bars suits brought “for

the purpose of restraining the assessment or

collection of any tax.” 26 U.S.C. § 7421(a). But the

Congressional Budget Office has estimated this “tax”

would, in fact, raise zero revenue—even though

revenue collection is the principal if not defining

feature of a true tax. Rather, in the words of the

statute itself, the penalty is designed to force

manufacturers’ “[]compliance” with the Program’s

requirements. 26 U.S.C. § 5000D.

Novartis is one of several manufacturers that have

challenged the Program’s constitutionality. After its

innovative drug ENTRESTO® was selected for

inclusion in the Program, Novartis was forced to

perform sham “negotiations” over a purported

“maximum fair price” for its drug, execute a series of

“agreements” misrepresenting that process to the

public, and then transfer its products to third parties

at government-dictated prices far below market

values. As Judge Hardiman explained in dissent in a

related challenge, this “byzantine scheme” of forced

transfers and compelled speech on pain of

“extraordinary” penalties blatantly violates the Fifth

and First Amendments of the Constitution. App.76a,

App.110a. The Program also violates the Eighth

Amendment’s Excessive Fines Clause, which

prohibits the government from punishing parties with

monetary penalties that are disproportionate to the

proscribed conduct. See Austin v. United States, 509

U.S. 602, 621 (1993). A fine that would effectively

bankrupt a business simply because it refused to

negotiate is an obvious and undeniable violation of

the Eighth Amendment.

Yet the court of appeals upheld the Program. In

doing so, it resolved three questions of first-order

constitutional

importance,

each

which

independently warrants this Court’s review.

First, the Third Circuit wrongly declined even to

address the merits of Novartis’s Eighth Amendment

claim on the ground that the AIA divested it of

jurisdiction

review

this

undeniably

unconstitutional exaction simply because Congress

labeled it a “tax.” That holding creates a roadmap for

the government to violate the Eighth Amendment

with impunity: create a sanction so exorbitant that no

party could ever pay it and therefore force them to

comply, negating their ability ever to challenge the

sanction post-payment. But label the sanction a “tax,”

precluding pre-payment review, and thereby insulate

it from judicial review altogether. If allowed to stand,

the Third Circuit’s decision will render the Excessive

Fines Clause a dead letter in the context of civil

penalties. Moreover, a core premise of the Third

Circuit’s decision—that it is doubtful whether the

Excessive Fines Clause applies to civil fines

unconnected to criminal conduct at all—is the subject

of a circuit conflict that it is imperative the Court

resolve. This case provides the opportunity to do so,

in the context of national legislation of far-reaching

importance. The Eighth Amendment question alone

warrants review.

Second, the panel held that the Program’s

mandates are “voluntary”—and thus do not violate

the Takings Clause or the First Amendment—

because manufacturers may purportedly withdraw all

their drugs from Medicare and Medicaid to avoid

them. In other words, the panel held that the ability

to avoid a penalty via withdrawing entirely from a

government-stabilized market gives the government

carte blanche to commit constitutional violations

against participants. Under the panel’s logic, a

constitutional violation is deemed consented to, even

when, as here, it is impossible for a manufacturer to

exit the market. So the government could, for

example, force manufacturers to surrender their

factories as a “condition” of remaining in Medicare, or

compel universities to endorse the President’s

economic agenda as the price of federal funding. The

Third Circuit’s reasoning is plainly wrong, and

sharply undercuts this Court’s recent Takings

jurisprudence.

Third, the panel held that the Program imposes

only an “incidental effect on speech”—and thus does

not violate the First Amendment—because it

primarily regulates conduct, or the prices

manufacturers may charge. But as Judge Hardiman

explained, if Congress had wished to impose a

straightforward price regulation, it could have simply

“capped what [manufacturers] may charge or what

CMS will pay for selected drugs.”

App.98a

(Hardiman, J., dissenting). Instead, “in Orwellian

fashion,” App.103a (Hardiman, J., dissenting), the

Program goes much further by compelling

manufacturers to affirm government-dictated views

on a highly contentious political issue on which they

have long disagreed—the “fairness” of their prices.

The panel’s reasoning would allow the government to

compel regulated entities to characterize any

regulation in the government’s preferred terms, with

no limiting principle. The First Amendment does not

permit that result.

The panel’s reasoning on all three issues squarely

conflicts with this Court’s precedents, and has

profound consequences for bedrock constitutional

limits on government power. This Court’s review is

imperative now, before any further damage is

inflicted.

As Judge Hardiman emphasized, the

constitutionality of the Program “is of great

importance to consumers of pharmaceutical drugs,

the companies that provide them, and the public at

large.” App.110a. The Program affects millions of

patients; reshapes an entire industry; and is altering

research and development decisions, steering

investment away from certain drugs likely to become

subject to the Program’s mandates.

Furthermore, the longer the Program stays in

place, the more extensive and severe its

consequences. The Program is designed to expand

radically—adding 15 new drugs next month and 20

additional drugs every year thereafter.

Each

successive expansion pulls additional manufacturers

into the Program’s regime of compelled speech, forced

transfers, and punitive enforcement. And the injuries

inflicted by the Program are irreparable. Compelled

statements by manufacturers about the unfairness of

their market-based prices reshape public and market

perceptions in ways no later ruling can reverse. And

once research and development programs are

abandoned or never pursued, the lost innovation will

be hard to recover. Review of this unprecedented

federal program is needed now.

STATEMENT OF THE CASE

A. Legal Background

1. Medicare is a federal program that provides

health-insurance coverage for those over the age of 65

and individuals with certain disabilities and medical

conditions. The Medicare program includes two parts

relevant here. Medicare Part B insures Medicare

beneficiaries for outpatient healthcare services,

including physician-administered drugs.

See 42

U.S.C. §§ 1395k(a), 1395x(s)(2)(A). Medicare Part D

permits beneficiaries to choose from a variety of

insurance plans offered by private insurers under

contracts with the government, which provide

coverage for self-administered drugs.

Together,

Medicare Parts B and D dominate the U.S.

prescription drug market, accounting “‘for almost half

the annual nationwide spending on prescription

drugs.’” App.32a.

Until Congress’s passage of the IRA, both parts of

the Medicare program guaranteed manufacturers

market-based pricing for all of their drugs, in order to

incentivize investment and innovation in new

products. Medicare Part B reimbursement is based

on a drug’s average sales price, which ensures that

reimbursement tracks market prices. 42 U.S.C.

§ 1395w-3a. And Medicare Part D expressly prohibits

HHS from “interfer[ing] with the negotiations

between drug manufacturers[,] . . . pharmacies[,] and

[private health plans]” regarding the price of Part D

drugs in order to ensure that market forces drive

pricing. Id. § 1395w-111(i). Historically, private

plans “can and do negotiate prices with prescription

drug manufacturers,” and have market incentives to

secure lower pharmaceutical prices. C.A. App. 21256.

Under these programs, the government “does not

directly purchase drugs” for its own use; rather, it acts

as a sovereign, using tax revenue to “subsidize[] a

portion of the costs of providing prescription drugs to

Medicare beneficiaries.” United States ex rel. Behnke

v. CVS Caremark Corp., No. 14-cv-824, 2024 WL

1416499, at *4 (E.D. Pa. Apr. 2, 2024). These

subsidies, though complex in structure, essentially

function as reimbursements from the government to

beneficiaries (often through private insurers) to offset

a portion of the costs beneficiaries incur purchasing

prescription drugs.

2. The Program upends the traditional marketdriven approach by (1) allowing government agencies

to unilaterally set the price for certain drugs,

(2) compelling those drugs’ manufacturers to sell

their products at that price, and (3) forcing the

manufacturers to publicly endorse those prices as

“maximum fair prices” arrived at via “negotiations.”

CMS first identifies the drugs that account for the

highest Medicare Part D expenditures and selects a

subset of those drugs for negotiation. 42 U.S.C.

§ 1320f-1(b)(1)(A). Each year, starting in 2023, at

least ten Part D drugs are selected, with Part B drugs

added to the selection process beginning in 2026. Id.

§ 1320f-1(a)(1), (4). Within 10 years, as many as 180

drugs will be covered by the Program.

After a drug is chosen, the manufacturer has only

30 days to enter into an initial “agreement[]” with

CMS to participate in the Program’s “negotiation”

process.

Id. §§ 1320f(d)(2)(A), 1320f-2(a).

That

“agreement” commits the manufacturer to publicly

“agree[ing]” that the price CMS eventually chooses—

no matter how low—is the “maximum fair price” for

the drug. C.A. App. 259-62.

If a manufacturer refuses to sign the initial

agreement by the statutory deadline, the statute

imposes a swiftly increasing penalty based on all

United States sales of the listed drug (not just

Medicare), which the Program terms an “excise tax.”

See 26 U.S.C. § 5000D(a). The penalty “begins at

185.71 percent and rises to 1,900 percent of the

selected drug’s total daily revenues from all domestic

sales.” App.72a (Hardiman, J., dissenting). For

Novartis, this would mean that the penalty for not

reaching an agreement to “negotiat[e]” over the

“maximum fair price” for its groundbreaking drug

ENTRESTO® would quickly rise to an annual rate of

$93.1 billion—almost double Novartis’s total global

annual net revenue.

C.A. App. 91-92.

It is

undisputed that this is not a penalty that Novartis—

or any other manufacturer—could ever afford to

incur. See id.

The only statutory mechanism to avoid these

penalties is for a manufacturer to “opt out of Medicare

[and Medicaid] . . . entirely”—not merely for the

selected drug, but for all of its drugs—“meaning

[CMS] will not reimburse patients or providers for

any of the drugs that the manufacturer sells (whether

or not those drugs are part of the [Program]).” Nat’l

Infusion Ctr. Ass’n v. Becerra (NICA), 116 F.4th 488,

495 (5th Cir. 2024). But manufacturers cannot opt

out immediately. Under the IRA, a manufacturer

that gives notice to terminate its Medicare

agreements must wait between 11 and 23 months

before that termination takes effect. See 42 U.S.C.

§§ 1395w-114a(b)(4)(B)(ii),

1395w-114c(b)(4)(B)(ii).

So to avoid penalties for refusing to sign an agreement

by October 1, 2023, a manufacturer would have

needed to act by January 2022—months before the

IRA was passed in August 2022. App.74a (Hardiman,

J., dissenting).

Once a manufacturer has entered into the initial

“agreement,” CMS makes the first “offer.” 42 U.S.C.

§ 1320f-3(b)(2).

Although the manufacturer is

allowed to provide a “counteroffer,” CMS is under no

obligation to consider it. Id. § 1320f-3(b)(2)(C)(ii), (e).

At the end of this process, CMS has the unfettered

discretion, unchecked by any processes of

administrative or judicial review, to unilaterally set a

“maximum fair price.” Id. § 1320f-7. The Program

provides no floor below which CMS may not set the

price. Id. § 1320f-3(c), (b)(2)(F)(ii). The law does

however impose a ceiling on how high a price CMS

can set. Specifically, CMS is directed to use as the

ceiling price the lowest number produced by two

specified statutory methods. Id. § 1320f-3(c)(1)(A),

(b)(2)(F). “These methods are expressly designed to

yield prices that are well below market value.” C.A.

App. 51-52. Moreover, Congress specifically directed

CMS to “aim[] to achieve the lowest maximum fair

price for each selected drug.” 42 U.S.C. § 1320f3(b)(1).

The Program next imposes a date by which

manufacturers must “agree” that CMS’s demand is

the “maximum fair price” for their drugs. For drugs

subject to price caps in 2026, that date was August 1,

2024.

See 42 U.S.C. §§ 1320f(d)(5)(C), 1320f3(b)(2)(E). While CMS claims that manufacturers are

bound to respond to CMS’s “final offer by either

accepting or rejecting [it],” C.A. App. 421,

manufacturers cannot in reality “reject” CMS’s offer

and walk away as in a normal negotiation. If a

manufacturer rejects CMS’s final “maximum fair

price” demand, “the consequences . . . are severe”: it is

subjected to the previously discussed excise “tax” that

runs up to 1900% (nineteen times) of the total revenue

derived from sales of that drug in the United States.

NICA, 116 F.4th at 495, 500; 42 U.S.C. § 1320f2(a)(1).

Congress was well aware that no

manufacturer could afford to incur such a “tax”; the

Congressional Budget Office (CBO) projected that

this “tax” would raise zero dollars. CBO, Cost

Estimate, Estimated Budgetary Effects of Public Law

117-169, to Provide for Reconciliation Pursuant to

Title II of S. Con. Res. 14, at 4-5 (Sept. 7, 2022).1

The Program then requires manufacturers to

provide “access” to their drugs at the “maximum fair

https://www.cbo.gov/system/files/2022-09/PL117-169_97-22.pdf.

price” to a wide array of individuals and entities,

including all eligible individuals dispensed drugs

under Medicare Parts B and D. 42 U.S.C. §§ 1320f2(a)(1), 1320f(c)(2). If a manufacturer does not do so,

it is subject to a different but equally harsh sanction—

civil monetary penalties at the extraordinary rate of

ten times the alleged overcharge. Id. §§ 1320f-2(a)(1),

1320f-6(a)-(b).

B. Factual And Procedural Background

1. Novartis is one of the world’s leading

pharmaceutical companies. It deploys cutting-edge

research to address some of society’s most challenging

healthcare problems and has developed a number of

groundbreaking pharmaceutical drugs. One such

drug is ENTRESTO®, a lifesaving medication that

treats heart failure. ENTRESTO® has helped more

than 2 million United States heart failure patients.

On August 29, 2023, Novartis’s ENTRESTO® was

selected for “negotiation” by CMS. Novartis signed

the “agreement” with the Secretary on September 28,

2023, and entered into the “negotiation” process

established by the statute to avoid the ruinous

penalties described above. App.7a. At the close of the

“negotiation” process, Novartis acceded to the

government’s “maximum fair price” for ENTRESTO®

to avoid the Program’s catastrophic fines. That price

took effect on January 1, 2026. 42 U.S.C. §§ 1320f(b),

(d); see id. §§ 1320f-2(a), 1320f-3(b).

2. Novartis filed suit in September 2023, seeking

declaratory and injunctive relief. Novartis alleged the

Program violates (1) the Eighth Amendment by using

the threat of excessive fines to coerce Novartis into

complying with the Program; (2) the Fifth

Amendment by appropriating Novartis’s property

rights in ENTRESTO®; and (3) the First Amendment

by compelling Novartis’s speech about the Program.

The district court heard oral argument in

Novartis’s case at the same time as three other

challenges to the Program: Janssen Pharmaceuticals,

Inc. v. Becerra, No. 3:23-cv-3818; Bristol Myers

Squibb Co. v. Becerra (BMS), No. 3:23-cv-3335; and

Novo Nordisk Inc. v. Becerra, No. 3:23-cv-20814.

Janssen and BMS involve overlapping First and Fifth

Amendment claims, while Novo Nordisk involves an

overlapping First Amendment claim. None of the

other three cases includes an Eighth Amendment

claim. The district court reached decisions in each

case at different times, granting summary judgment

to the government in all four.

As to Novartis’s Eighth Amendment challenge, the

court concluded that the AIA divested it of jurisdiction

to adjudicate the merits because “Congress labeled

the excise tax a ‘tax.’” App.26a. The district court also

rejected Novartis’s claims under the First and Fifth

Amendments because Novartis purportedly is not

“legally compelled” to participate in Medicare.

App.23a.

3a. The four manufacturers appealed. The court

of appeals addressed BMS and Janssen’s challenges

first and, in a split decision, affirmed the district

court. App.30a-110a. As to their Fifth Amendment

challenges, the panel held that no physical taking

occurred because manufacturers were not “legally

compelled” to participate in Medicare and Medicaid—

rendering any transfer of their property “voluntary.”

App.39a-54a. In the majority’s view, the fact that

manufacturers could legally “stop doing business with

the government” meant there could be no “physical

taking” as a matter of law. App.38a. The panel

dismissed as irrelevant “basic economic rationality

dictat[ing]” participation in Medicare and Medicaid

given the government’s dominance of the

prescription-drug market. App.41a.

As to the First Amendment, the panel

acknowledged that the mandated “agreements” carry

“expressive component[s],” but nonetheless concluded

that any compelled speech is solely “incidental” to the

Program’s regulation of “conduct.” App.58a. In the

panel’s view, compelled statements about the

“negotiation” process and manufacturers’ prices

simply “effectuate the Program” and therefore do not

trigger First Amendment scrutiny. App.60a. The

panel also relied on the premise that manufacturers

“voluntarily chose to participate in the Program,”

despite the ruinous penalties threatened. App.63a.

Judge Hardiman dissented in full. He argued that

the Program effects a “clear physical taking by forcing

[manufacturers] to turn over physical doses” of their

drugs at government-dictated prices. App.76a. And

he rejected the manufacturers’ theoretical ability to

withdraw from Medicare and Medicaid in time to

avoid this taking as illusory, because under the

statute’s timing requirements, manufacturers could

not have withdrawn from Medicare and Medicaid in

time to avoid the Program at all. App.81a-92a.

Judge Hardiman likewise concluded that the

Program violates the First Amendment by, in

“Orwellian fashion,” forcing manufacturers to “convey

the Government’s message about a subject of great

political significance and debate: whether the

Program is a voluntary negotiation or a forced sale at

prices set by CMS.” App.103a. He rejected the panel’s

characterization of this speech burden as merely

“incidental to regulated conduct,” emphasizing that

Congress could have “regulate[d] conduct” by capping

prices directly and simply requiring manufacturers to

sign onto those prices. App.99a-100a. Instead, he

explained, the Program “does much more than that”

by requiring manufacturers to make representations

about the negotiation “process” and resulting prices

that “they have abjured from the start.” App.98a,

App.103a.

b. One week later, the panel affirmed the district

court’s dismissal of Novartis’s challenge as well. It

rejected Novartis’s First and Fifth Amendment

challenges “[f]or the reasons” set forth in its earlier

opinion rejecting BMS and Janssen’s challenges.

App.16a. And it concluded that the AIA barred review

of Novartis’s Eighth Amendment Excessive Fines

Clause claim. App.11a-16a. In the panel’s view,

Congress’s decision to label the Program’s ruinous

penalties as “taxes” triggered the AIA’s judicialreview bar, even though these penalties were never

intended to raise revenue, were designed solely to

coerce compliance, and will never be “assess[ed] or

collect[ed]” with or without Novartis’s suit. App.12a15a.

The panel further declined to apply the Enochs v.

Williams Packing & Navigation Co., 370 U.S. 1

(1962), exception to the AIA, which applies when a

plaintiff would suffer irreparable injury if it had to

wait to challenge a tax until after paying it and it is

clear the plaintiff will prevail on the merits. App.15a.

The panel did not dispute that Novartis would face

irreparable harm absent a pre-enforcement

challenge, given that no rational entity would ever

pay this exorbitant penalty to challenge it after-thefact. Instead, the panel concluded that it was not

“certain” that the Excessive Fines Clause can ever

apply to civil penalties imposed on non-criminal

conduct, such that it is clear Novartis would win on

the merits. App.15a-16a. In other words, the panel

reasoned that the very fact that the government chose

to punish innocent conduct—here, declining to agree

to transfer a product at prices far beneath market

values—placed an indisputably punitive and

disproportionate sanction beyond constitutional

scrutiny altogether.

REASONS FOR GRANTING THE WRIT

This case presents a challenge to a novel

regulatory regime of extraordinary breadth and

consequence. The Program compels manufacturers to

transfer their most valuable drugs to third parties at

prices far below market values while publicly

endorsing that government-dictated process and the

resulting prices—all under threat of ruinous financial

penalties unprecedented in American history. In

doing so, it crosses multiple constitutional red lines.

The court of appeals’ decision nevertheless allowing

this Program to stand grants Congress sweeping

power to evade constitutional limits, deepens an

existing division in the court of appeals, and conflicts

with this Court’s precedents. Review is needed now

to limit the potentially irreversible damage this

Program is already inflicting, and this case is an ideal

vehicle to resolve the important questions presented.

I. THE

DECISION

BELOW

WRONGLY

EXCUSES CONSTITUTIONAL VIOLATIONS

OF AN EXTRAORDINARY MAGNITUDE

The decision below sanctions three distinct

constitutional violations. The reasoning supporting

each one is not only wrong but highly consequential,

materially expanding the government’s ability to

evade constitutional scrutiny of its actions.

A. The

Anti-Injunction

Act

Warrants This Court’s Review

Holding

The court of appeals’ ruling expanding the AIA’s

judicial-review bar deepens a circuit conflict, is

wrong, and warrants review. The Third Circuit below

held that the AIA insulates from judicial review any

penalty Congress labels a “tax” that is unconnected to

criminal conduct—even if that penalty is coercive,

non-revenue-raising, and ruinous in amount, and

regardless of how disproportionate it is to any alleged

wrongdoing. That conclusion is irreconcilable with

this Court’s precedents as well as the precedent of

other circuits. And it cannot be right. If allowed, it

would grant governments the unchecked power to

shield from judicial review any penalty imposed on

entirely innocent conduct, no matter how exorbitant

or unreasonable, simply by labeling it a “tax.” In fact,

a penalty’s very excessiveness is what would insulate

it from Eighth Amendment review. That untenable

result demands this Court’s intervention.

1. The Third Circuit’s interpretation of the AIA

and refusal to apply the Williams Packing exception

have severe ramifications. Together, they foreclose

judicial review of any civil penalty unconnected to

criminal conduct labeled a “tax.”

According to the panel, Congress’s statutory

labeling is decisive in determining whether the AIA

applies to bar pre-enforcement review of a penalty. If

Congress labels an exaction a “fine” or a “penalty,” the

AIA does not apply, and a federal court may assess

whether the fine is excessive under the Eighth

Amendment.

But once “Congress label[s] [a]n

exaction a ‘tax,’” any pre-enforcement lawsuit arguing

that the “tax violates the Excessive Fines Clause”

falls within the AIA’s scope, and is therefore barred.

App.12a-14a. The panel acknowledged that this holds

true even when “Congress expects to raise no revenue

from [the tax],” even when the tax is set at a level so

astronomically high that it could never be paid, and

even when no refund action could ever realistically be

brought. App.14a.

The panel then compounded its error by

essentially removing, in the context of civil penalties,

the core safety valve of the Williams Packing

exception to the AIA.

That exception permits

injunctions against the enforcement of “taxes” when

the plaintiff will otherwise suffer “irreparable injury”

and can demonstrate a “certainty of success on the

merits.” Bob Jones Univ. v. Simon, 416 U.S. 725, 737

(1974) (citing Enochs v. Williams Packing &

Navigation Co., 370 U.S. 1, 6-7 (1962)). The panel did

not dispute the profound irreparable injury Novartis

would suffer by being forced either to engage in

speech with which it disagrees or pay ruinous

penalties. Nor did it dispute that imposing a $93

billion penalty on wholly innocent conduct is grossly

disproportionate under the Eighth Amendment. Yet

the court held that the Williams Packing exception

was unavailable because Novartis’s right to relief was

not “certain” due to the absence of a precedent from

this Court establishing that “the Excessive Fines

Clause applies to civil penalties imposed without any

connection to criminal conduct.” App.15a-16a. In

other words, the panel held that there is no exception

under Williams Packing for civil fines unconnected to

criminal conduct.

That holding leads to the

astonishing result that such a civil penalty escapes

constitutional scrutiny altogether, whenever it is

labeled a tax.

This reasoning paves the way for unchecked

governmental overreach masquerading as “taxation.”

Under the panel’s logic, Congress could punish even

the most innocent conduct with enterprise-destroying

fines, and block any judicial review by channeling

lawsuits into “refund” actions that, by definition, will

never occur. That is exactly what happened in this

case: Congress imposed a $93 billion penalty on the

completely innocent conduct of declining to sign an

agreement to negotiate, and then insulated that

sanction from judicial review by calling it a “tax”—

knowing full well no one would ever pay this “tax” to

unlock a refund suit.

The implications of that reasoning extend far

beyond drug pricing. The government could, for

example, levy a trillion-dollar “tax” on individuals

who choose not to recycle. Under the Third Circuit’s

logic, affected individuals would first have to pay that

tax in order to initiate a refund suit, because (1) the

AIA would bar pre-enforcement review and (2) the

Williams Packing exception would be unavailable

because the penalty is civil, not criminal. And if those

individuals simply complied with the law (as anyone

surely would), they would lose the ability to challenge

it post-enforcement—meaning they could not

challenge it at all. The upshot is that the more

excessive a fine is, the less able a court is to review it.

Such an illogical and sweeping rule cannot be correct,

and demands this Court’s review.

2. The Third Circuit’s AIA holding is not just

consequential—it conflicts with this Court’s

precedents, while deepening a circuit conflict.

For starters, the premise underlying the Third

Circuit’s refusal to apply the Williams Packing

exception—that this Court has “reserved” the

question whether civil penalties can qualify as

“fines”—is simply incorrect. App.15a. Austin v.

United States squarely answered that question. 509

U.S. 602 (1993).

In Austin, the government argued—just as it does

here—that the Excessive Fines Clause reaches only

those sanctions that resemble traditional “criminal”

punishment. Id. at 607. This Court unanimously and

emphatically rejected that theory, explaining that the

question for Excessive Fines Clause purposes “is not,

as the United States would have it, whether [a

penalty] is civil or criminal, but rather whether it is

punishment.” Id. at 610. The Court underscored that

the Eighth Amendment serves “to limit the

government’s power to punish,” a power that “‘cuts

across the division between the civil and criminal

law.’” Id. at 609-10. And it explained that a fine has

the hallmark of punishment when it “cannot fairly be

said solely to serve a remedial purpose, but rather can

only be explained as also serving either retributive or

deterrent purposes.” Id. at 610. Austin is fatal to the

Third Circuit’s Williams Packing analysis.

The Third Circuit’s Williams Packing analysis also

deepens an entrenched and severely lopsided circuit

split. The Fourth, Seventh, Eighth, Ninth, and

Eleventh Circuits have all correctly read Austin as

holding that the Excessive Fines Clause applies to

civil monetary penalties that are at least partly

punitive or deterrent, even when they are not

connected to criminal conduct.2 Meantime, the First

Circuit has continued to treat civil penalties as

categorically outside the Clause absent a “criminal”

nexus, notwithstanding Austin. United States v.

Toth, 33 F.4th 1, 16 (1st Cir. 2022). The Third

Circuit’s decision here aligns with the First Circuit’s

outlier view; although the court stopped short of

expressly adopting the civil-criminal limitation, it

treated the question as unresolved even though

Austin firmly settles it. App.15a.

Scholars and jurists alike have recognized this

lingering “split as to whether the Excessive Fines

Clause extends to civil fines and forfeitures

unconnected to a criminal proceeding.” Jessica L.

Asbridge, Fines, Forfeitures, and Federalism, 111 Va.

L. Rev. 67, 76 (2025); see, e.g., Schwarzbaum, 127

F.4th at 275 (“declin[ing] to ‘repeat [the First

Circuit’s] mistakes’” and instead following Austin).

And members of this Court have urged resolution of

2 See, e.g., United States ex rel. Drakeford v. Tuomey, 792

F.3d 364, 387 (4th Cir. 2015) (“[W]here ‘a civil sanction “can only

be explained as serving in part to punish,” then the fine is subject

to the Eighth Amendment.’”); Grashoff v. Adams, 65 F.4th 910,

916 (7th Cir. 2023) (“The inquiry does not depend on whether the

sanction arises in the civil or criminal context.”); Grant ex rel.

United States v. Zorn, 107 F.4th 782, 797 (8th Cir. 2024) (“The

FCA’s combination of treble damages with per-claim penalties

constitutes a punitive sanction that falls within the reach of the

Excessive Fines Clause.”); United States v. Mackby, 261 F.3d

821, 829 (9th Cir. 2001) (“[T]he Supreme Court [has] held that

civil fines fall within the scope of the Eighth Amendment.”);

United States v. Schwarzbaum, 127 F.4th 259, 270, 274-75 (11th

Cir. 2025) (noting that “[t]he question of whether the Excessive

Fines Clause applies to civil cases was squarely presented to the

Court . . . in Austin” and holding that the Clause applied to a

civil penalty imposed by the IRS).

this lopsided divide once and for all. See Toth v.

United States, 143 S. Ct. 552, 553 (2023) (Gorsuch, J.,

dissenting from denial of certiorari) (identifying

“reasons to worry about the First Circuit’s decision,”

including that it “incentivizes governments to impose

exorbitant civil penalties” and “clashes with the

approach many other courts have taken”).3

This case underscores why clarification from this

Court on the scope of the Excessive Fines Clause is

urgently needed. The government here exploited this

perceived doctrinal uncertainty to insulate massive,

coercive financial exactions from constitutional

scrutiny,

notwithstanding

their

blatant

unconstitutionality and the severe and irreparable

harm they impose on manufacturers like Novartis.

This case provides the ideal vehicle to both correct

that error, and resolve the underlying circuit conflict.

Separate from its Austin error, the Third Circuit

also misread the text of the AIA to find it applicable

in the first place. The AIA only bars suits that are

brought “for the purpose of restraining the assessment

or collection of any tax.”

26 U.S.C. § 7421(a)

(emphasis added). As this Court has explained, the

3 The Court has granted certiorari in Pung v. Isabella

County, No. 25-95 (scheduled for argument Feb. 25, 2026), which

presents the question whether the civil penalty imposed in that

case—unconnected to any criminal conduct—constitutes an

excessive fine under the Eighth Amendment. But there is a

substantial prospect that the Court will not reach that question,

because the case also presents an alternative challenge under

the Fifth Amendment’s Takings Clause. At a minimum, this

case should be held for Pung, because if this Court were to find

that the Eighth Amendment applies to civil fines unconnected to

criminal conduct, vacatur would be required as to the panel’s

Williams Packing holding.

AIA’s language thus directs courts to look past any

“tax” label to the actual “injuries alleged”—analyzing

whether the plaintiff faces an “impending or eventual

tax obligation”—to determine whether a suit has the

“purpose of” restraining tax collection and will

“disrupt[] the flow of revenue to the Federal

Government.” CIC Servs., LLC v. IRS, 593 U.S. 209,

212, 218-19 (2021). The whole point of the AIA is to

“‘protect[] the [Federal] Government’s ability to

collect a consistent stream of revenue.’” Id. at 212.

Here, Novartis’s alleged injury does not stem from

a tax being “assessed or collected” because, with or

without its requested injunction, no tax will ever be

levied or paid, which Congress knew when it passed

the IRA. Supra 10. Rather, Novartis’s injury arises

from CMS’s use of an exorbitantly high “tax” as a

sledgehammer during negotiations.

No case has ever held that the AIA bars a suit

implicating a “tax” that is neither expected nor

intended to generate a single penny of revenue. The

reason is evident: the AIA’s “familiar pay-now-suelater procedure,” CIC Servs., 593 U.S. at 222, makes

no sense in the context of an unpayable fine. Such

fines, by their very nature, cannot raise revenue or be

subject to refund actions. In these circumstances, the

AIA serves no function other than to permanently bar

judicial review of allegedly unconstitutional fines.

B. The Fifth Amendment Holding Warrants

This Court’s Review

The Program also effects a physical taking by

requiring manufacturers to transfer their drugs to

third parties at below-market, government-dictated

prices. The panel did not meaningfully dispute that

reality. Instead, it excused the taking on the theory

that these compelled transfers are “voluntary”

because manufacturers may purportedly avoid them

by withdrawing all their medicines from the Medicare

and Medicaid programs.

App.38a-54a.

That

reasoning—endorsing what the panel itself described

as the government’s “unrestricted power” over

participants in government-subsidized markets—has

sweeping implications and squarely conflicts with

this Court’s Takings Clause precedents. App.39a.

The Third Circuit’s Fifth Amendment holding

independently warrants review.

1. The consequences of the Third Circuit’s

“voluntariness” holding are profound. The panel

reasoned that because manufacturers are purportedly

“free to stop doing business with the government,”

any physical taking of their property is categorically

immune from constitutional scrutiny. App.38a. That

is so even though the government is not a purchaser

within those markets, but rather subsidizes private

purchases made by program-beneficiaries. In other

words, the theoretical ability of a seller to withdraw

from a market where the government chooses to

subsidize purchases gives the government carte

blanche to commit constitutional violations against

that seller.

That result has alarming and far-reaching

implications. Under the Third Circuit’s reasoning, a

rent-assistance

program

would

permit

the

government to seize landlords’ property simply

because participants have the “option” to stop renting

their property to people who receive government

subsidies. Similarly, the government could force drug

manufacturers to surrender their raw materials or

manufacturing

plants

without

compensation,

provided they have the “option” of leaving Medicare.

The

panel’s

reasoning

effectively

suspends

constitutional protections for participants in

government-stabilized markets.

A rule of such

breadth and consequence should not take hold

without this Court’s review.

2. The court of appeals’ “voluntariness” holding

also squarely conflicts with this Court’s decision in

Horne v. Department of Agriculture, 576 U.S. 351

(2015). Indeed, Horne rejected the precise theory on

which the court below relied: that the theoretical

“option” to stop selling to people who receive subsidies

from the government excuses constitutional

violations against market participants.

In Horne, a federal statute required farmers to

“turn over a percentage of their raisin crop” under

pain of penalties, subject to the right to recover some

proceeds if the government resold the raisins. Id. at

362.

When farmers declined to comply, “[t]he

Government sent trucks . . . to pick up the raisins”;

and when the farmers “refused [the government]

entry,” the government imposed fines for

“disobeying.”

Id. at 356.

Even though the

government never physically seized the raisins, the

Court held that the statute effected a “clear physical

taking” because the farmers lost their “right to control

their [raisins’] disposition.” Id. at 358, 361, 364. As

Judge Hardiman explained, that reasoning applies a

fortiori here: “Like th[e] reserve requirement [in

Horne],” the Program “imposes a clear physical taking

by forcing the Companies to turn over physical doses

of [their drugs] to Medicare beneficiaries at certain

prices.” App.76a.

Critically, the government argued in Horne—just

as it does here—that there could be no physical taking

because the farmers “voluntarily enter[ed] the

commercial market for raisins.” Horne Respondent’s

Br. 28-29 (No. 14-275), 2015 WL 1478016. But the

Court emphatically rejected that argument, holding

that the government may never take physical

property as a “condition” for market participation—

regardless whether property owners “voluntarily

cho[se] to participate in [that] market” and

irrespective of how regulated that market may be.

Horne, 576 U.S. at 364-67. That holding is fatal to the

Program.

If a “government mandate” were a

precondition to a per se takings claim (as the panel

here concluded), Horne would have come out the

opposite way.

The panel’s attempts to distinguish Horne do not

withstand scrutiny. The panel reasoned that whereas

the farmers in Horne would have had “to exit the

raisin market entirely” to avoid a taking, Novartis

need only “withdraw from [Medicare and Medicaid]”

while

continuing

participate

“in

the

pharmaceutical market—including by selling . . . to

private parties.” App.44a.

But the growers in Horne were not

“manufacturers” of raisins—they grew grapes, and

sought to sell those grapes into the federally

supported raisins market. So they could sell the same

grapes to other buyers in alternative markets, such

“‘as table grapes or for use in juice or wine’”—just as

Novartis can (by the panel’s telling) sell the same

products outside the federally regulated market.

Horne, 576 U.S. at 365. But Horne rejected this “‘[l]et

them sell wine’” defense as “wrong as a matter of law.”

Id. If anything, the cost of withdrawal here is even

more onerous than in Horne, because a manufacturer

must, by the panel’s telling, withdraw “all its

products” from the relevant market, rather than just

the one subject to the taking. App.73a (Hardiman, J.,

dissenting).

Regardless, as Judge Hardiman explained,

manufacturers in fact had no “option” to exit Medicare

and Medicaid in time to avoid the Program. See

App.81a-92a.

Congress

expressly

blocked

manufacturers from withdrawing from those

programs without providing up to 23 months’ notice.

See 42 U.S.C. §§ 1395w-114a(b)(4)(B)(ii), 1395w114c(b)(4)(B)(ii). So to avoid penalties for refusing to

sign the initial agreement by October 1, 2023,

Novartis would have had “to accomplish the

impossible”: provide notices of termination by

January 31, 2022—before the IRA even “became law.”

App.74a (Hardiman, J., dissenting) (emphasis

omitted). “The upshot is that the Companies could

not have declined to participate in the first year of the

program.” App.82a (Hardiman, J., dissenting). And

“[o]nce a manufacturer . . . signed [the initial]

[a]greement, it [became] bound by it, full stop”—

meaning CMS is required to “impose civil monetary

penalties each time [a manufacturer] violates an

Agreement,” including by failing to provide Medicare

beneficiaries “access” to selected drugs at belowmarket prices. App.90a (Hardiman, J., dissenting).

The panel focused on CMS’s “promise” in a nonbinding guidance document to offer manufacturers an

expedited 30-day exit from Medicare and Medicaid.

See App.7a. But as Judge Hardiman explained in

BMS, that “expedited exit option conflicts with the

Act,” which sets forth only two exit options: (1) a

manufacturer can voluntarily withdraw and wait 11

to 23 months; or (2) CMS can remove a manufacturer

with 30-days’ notice if the manufacturer engaged in

“knowing and willful violations” of the program

agreements or “similar misconduct.” App.81a-88a.

The statute does not give CMS the authority to create

an additional exit pathway. If the government may

defeat constitutional scrutiny by pointing to an exit

that exists in name only—or worse, does not exist at

all—there would be no limiting principle. Such a rule

warrants this Court’s review, too.

C. The First Amendment Holding Warrants

This Court’s Review

Finally, the Third Circuit’s First Amendment

holding also independently merits review. On its face,

the Program directly compels speech. Rather than

simply capping the prices of manufacturers’ drugs, it

orders that manufacturers speak about those prices,

attesting that government-dictated prices were

obtained through a “negotiation” and are the

“maximum

fair

prices”—which

means

that

manufacturers’ higher market-set prices are unfair.

Yet the panel held that the Program imposes only an

“incidental effect on speech” or, in the alternative,

does not compel any speech because participation in

the Program is “voluntary.” App.54a. That reasoning

conflicts with this Court’s precedents and opens the

door to sweeping government regulations forcing

private entities to speak the government’s preferred

messages.

1. As Judge Hardiman explained, the Program

violates the First Amendment by compelling

manufacturers to speak under threat of ruinous

penalties.

For example, it forces manufacturers to represent

to the public that they voluntarily engaged in a

“negotiation” over the “maximum fair price,” when, in

reality, the government unilaterally sets the price.

App.102a-03a (Hardiman, J., dissenting). And it

compels manufacturers to sign documents stating

that they “agree” to the “maximum fair price” CMS

sets after those pretend “negotiation[s]” conclude. 42

U.S.C. §§ 1320f-2(a)(1), 1320f(c)(2). Signing those

documents conveys clear political messages to the

public:

that these are genuine, good-faith

negotiations; that this voluntary give-and-take

culminated in a true “agreement”; that the “agreedon” price reflects the selected drug’s value; and that

manufacturers’ previous and current market prices,

even those resulting from genuine negotiations, are

“unfair prices.” App.101.a (Hardiman, J., dissenting).

Of course, Novartis does not genuinely “agree”

with any of this. It has been coerced into signing

these “agreements” because, otherwise, it would be

deemed in “noncompliance” with the Program, facing

untenable penalties that would quickly balloon to

$93.1 billion.

The Program also compels speech through

performative conduct. Manufacturers are forced to

participate in a sham “negotiation” process that is

designed to create the appearance to the public of

voluntary give-and-take when no such flexibility

exists. By compelling Novartis to express “support for

views [it] find[s] objectionable”—both through its

statements in the agreements and its participation in

the performative “negotiation” process—the Program

violates the First Amendment. Janus v. American

Fed’n of State, Cnty., & Mun. Emps., Council 31, 585

U.S. 878, 892 (2018).

2. The Third Circuit’s contrary holding does not

comport with this Court’s compelled-speech

precedents. It also carries serious consequences for

federal regulation going forward.

a. The panel first reasoned that the Program

“permissibly

regulates

conduct”—the

prices

manufacturers charge—and thus carries “only an

incidental effect on speech.” App.54a. But that

directly conflicts with this Court’s decision in

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

37 (2017).

In Expressions, the Court drew a critical

distinction between laws that merely set prices—

which impose lawful, incidental restrictions on

speech—and laws that control “how sellers may

communicate their prices,” which impose nonincidental restrictions on speech.

Id. at 47-48

(emphasis added). A law that simply requires sellers

to charge a particular amount—such as a rule

“requiring all New York delis to charge $10 for their

sandwiches”—regulates conduct, and any effects on

the sellers’ speech, such as updating menus to include

“$10,” would be incidental. Id. at 47. The statute in

Expressions crossed the constitutional line because it

dictated how merchants could “convey” their prices,

prohibiting them from framing charges as a cash price

plus a credit-card “surcharge.” Id. In other words,

the law compelled a particular way of communicating

price information.

The Program falls squarely on the forbidden side

of that line. It is not a “typical price regulation,” id.

47,

mandates

communications

“characteriz[ing]” “product price[s],” Nicopure Labs,

LLC v. FDA, 944 F.3d 267, 292 (D.C. Cir. 2019),

including statements about the nature of the process

used to adopt those prices and their perceived

fairness—statements with which Novartis profoundly

disagrees.

As Judge Hardiman explained, if Congress truly

wished to impose a price regulation, it could have

simply “capped what [manufacturers] may charge or

what CMS will pay for selected drugs,” App.98a.

Alternatively, Congress could have employed neutral,

purely descriptive terms such as “maximum allowable

price.” Instead, in “Orwellian fashion.” App.103a

(Hardiman, J., dissenting), the Program requires that

manufacturers “convey” the government’s preferred

message on a highly contentious political issue on

which manufacturers have disagreed from the outset,

Expressions, 581 U.S. at 47-48. That is direct

regulation of speech.

The panel’s contrary reasoning, once again, carries

startling consequences. By the panel’s telling, any

price regulation permits the government to

simultaneously compel market participants to

characterize the regulation in a certain (governmentfavorable) way as “incidental” to that regulation.

App.55a-61a. So the government could require banks

to state that prior interest rates were “exploitative,”

or force landlords subject to rent control to state that

previous rents were “unjust.” Under that rationale,

“there would be no end to the government’s ability to

skew public debate by forcing companies to use the

government’s preferred language.” National Ass’n of

Mfrs. v. SEC, 800 F.3d 518, 530 (D.C. Cir. 2015). A

ruling that grants such power warrants this Court’s

review.

b. The Third Circuit alternatively held that

manufacturers “voluntarily chose to participate in the

Program” and “[a]ny ancillary speech component

inherent in Program participation was therefore not

compelled.” App.63a-64a. That argument is wrong—

and carries dire consequences—for all the same

reasons discussed in the Fifth Amendment context.

Supra 10.

Indeed, the notion that voluntary

participation in a program can excuse a constitutional

violation carries even less force in the First

Amendment context.

The Court’s decision in Agency for International

Development v. Alliance for Open Society

International, Inc. (USAID), controls. See 570 U.S.

205 (2013). There, the Court explained that “the

relevant distinction” in assessing speech conditions

on federal programs is between conditions that

“specify the activities Congress wants to subsidize”

and conditions that “seek to leverage funding to

regulate speech.” Id. at 214-15. Applying that

distinction, the Court invalidated a requirement that

federal funds not “be used by an organization ‘that

does not have a policy explicitly opposing prostitution

and sex trafficking.’” Id. at 208, 221.

Here, the Program’s compelled-speech provisions

do not merely “specify” what Congress wishes to

subsidize; they leverage the threat of exorbitant fines

to force manufacturers to engage in governmentmandated performative speech. Those mandates

operate “on the recipient of the [government’s

benefits] rather than on a particular program or

service,” and are therefore unlawful.

Rust v.

Sullivan, 500 U.S. 173, 197 (1991); see USAID, 570

U.S. at 218-19.

To try to sidestep USAID, the panel reasoned that

any “compelled” speech is “within the scope of the

Program because the contracts at issue effectuate the

drug price negotiation process established by

Congress.” App.66a. But that reasoning is entirely

circular—the government cannot avoid First

Amendment scrutiny simply by defining its program

to include compelled speech. See USAID, 570 U.S. at

214-15. As Judge Hardiman explained, the Program

does not need loaded language conveying value

judgments about its results to function. App.102a03a. The sole purpose of this compelled speech is to

mislead the public.

The upshot of the decision below is that the

government may force participants in federal

programs to say virtually anything so long as the

mandate is packaged as part of the program’s

implementation. That is a positively Orwellian

result.

D. The Combination Of These Three

Constitutional Violations Makes This

Case Uniquely Important

It is uncommon for a federal statute to raise even

a single serious constitutional question. It is rarer

still for a single regulatory scheme to implicate

multiple constitutional limits at once. The Program’s

“byzantine scheme” of compelled speech, mandated

transfers of property, and grossly disproportionate

fines

forms

coercive

regulatory

model

unprecedented in federal economic regulation.

App.110a (Hardiman, J., dissenting).

Allowing that model to stand will simply invite

replication across other sectors. Congress now has a

ready-made template for committing constitutional

violations with impunity: provide subsidies for the

purchase of goods in a market, claim that this subsidy

makes participation in the market voluntary, and

enforce surrender of constitutional rights through

boundless civil penalties—which escape judicial

review altogether because they are labeled “taxes.”

That is a serious threat to the rule of law, and its

implications for future federal regulation are too

significant to be left to percolate without this Court’s

review.

II. THE COURT’S REVIEW IS NEEDED NOW

The constitutionality of the Program is, as Judge

Hardiman explained, “of great importance to

consumers of pharmaceutical drugs, the companies

that provide them, and the public at large.”

App.110a. The Program affects millions of patients,

reshapes an entire industry, and radically redefines

limits of regulatory power.

Questions of that

magnitude call out for this Court’s review, and review

should come now—before further irreversible harm

takes hold.

The federal government dominates the Nation’s

healthcare market, “account[ing] for almost half of all

spending on prescription drugs—some $200 billion

per year.” App.68a (Hardiman, J., dissenting). The

Program is poised to radically transform that market:

The CBO estimates that the Program will redirect

about “$100 billion” in healthcare payments in just its

first decade.

CBO, Prescription Drug Pricing

Reduction Act of 2019 (July 24, 2019) (emphasis

added).4

But the importance of this case extends well

beyond its implications for our economy. Although

the Program remains in its early stages, it has

already inflicted profound and irreparable harm on

regulated entities. The first “cycle” of the Program is

now complete, with ten manufacturers each forced

into a series of “agreements” misrepresenting that

https://www.cbo.gov/system/files/2019-07/PDPRA_

preliminary_estimate.pdf.

they endorse government-dictated prices for their

drugs and engaged in real “negotiations” over those

prices. Those prices took effect this month and reflect

dramatic departures from prior market levels—

reductions ranging from 40% to 80% off of list prices.

Press Release, CMS, HHS Announces 15 Additional

Drugs Selected for Medicare Drug Price Negotiations

in Continued Effort to Lower Prescription Drug Costs

for Seniors (Jan. 17, 2025).5 The result is billions of

dollars

threatened

exactions

against

manufacturers, which will fundamentally and

irretrievably alter investment decisions.

For

example, a CBO report indicates that the Program

will result in thirteen fewer potentially life-saving

drugs coming to market over the next three decades.

See CBO, Cost Estimate, supra, at 15.

And that is only the beginning. By design, the

Program will scale rapidly—pulling additional

manufacturers and drugs into its coercive regime.

The Program’s second “cycle” is already underway;

CMS has forced the manufacturers of 15 additional

drugs into sham “negotiations” and “agreements,”

which culminated in government-dictated prices set

to take effect January 2027. CMS, Medicare Drug

Price Negotiation Program: Negotiated Prices for

Initial Price Applicability Year 2027 (Nov. 2025).6

And CMS will select 15 additional drugs for inclusion

in the Program in February 2026, including (for the

first time) drugs covered under Part B as well as Part

5 https://www.cms.gov/newsroom/press-releases/hhsannounces-15-additional-drugs-selected-medicare-drug-pricenegotiations-continued-effort-lower.

https://www.cms.gov/files/document/fact-sheetnegotiated-p ri ce s-ip ay- 202 7 .pd f .

D—bringing the number of total drugs subject to

sham negotiations and forced agreements and

transfers to 40. 42 U.S.C. § 1320f-1(a). And the

statute then accelerates further—sweeping in 20

additional drugs per year from 2027 onward—so the

number of drugs and manufacturers subject to the

Program’s regime of forced misrepresentations and

transfers of property accumulates year after year. Id.

If the Court has any doubt about the

constitutionality of the program, it should intervene

now. Waiting comes at a steep and unnecessary cost;

each successive cycle of the Program layers new

compelled speech, forced transfers, and punitive

threats on top of those already in place. And those

effects cannot later be undone.

Compelled

declarations by manufacturers that governmentdictated prices are “fair” obviously reshape political

debate on issues of the utmost importance, altering

how both voters and lawmakers will perceive the

issues. The longer those misrepresentations stay in

place, the harder the resulting reputational damage

becomes to overcome.

Nor can manufacturers later undo the strategic

decisions forced by this sustained, below-market

pricing—including

dramatic,

forward-looking

reductions to their research and development budgets

to operate under prices set far beneath market levels.

The Program “reduce[s] investments that [would]

produce new drugs and new applications of existing

drugs—side effects that are already being felt.” Erica

York, Inflation Reduction Act’s Price Controls Are

Deterring New Drug Development, Tax Foundation

(Apr. 26, 2023).7 And it has shifted research priorities

away from certain products that “would likely be

subject to [the Program],” including therapies for

“conditions that disproportionally affect older adults.”

Greg Licholai, Inflation Reduction Act Unintended

Consequences For Medical Innovation, Forbes (Feb. 3,

2025).8 This reallocation of innovation capital will

have “profound” impacts on the “future of drug

innovation—and ultimately [on] patients.” Id. The

longer the Program remains in force, the deeper and

more irreversible those effects become, even if the

Court later strikes down the statute.

This case is an ideal vehicle for reviewing the

Program’s constitutionality. It squarely presents the

three most important issues raised by the Program.

The court of appeals resolved each of these issues on

purely legal grounds. App.11a-16a. And no other

pending petition presents an Eighth Amendment

challenge to the Program. Resolution of the AIA

question is crucial to ensuring that this challenge can

be resolved by the courts. In an era of “more and more

civil laws bearing more and more extravagant

punishments,” Sessions v. Dimaya, 584 U.S. 148, 184

(2018) (Gorsuch, J., concurring in part and concurring

in the judgment), the Program at issue in this case

breaks new barriers when it comes to imposing fines.

Review is urgently needed on this question.

This case accordingly offers an ideal vehicle to

review this immensely consequential federal program

https://taxfoundation.org/blog/inflation-reduction-actmedicare-prescription-drug-price-controls/.

https://www.forbes.com/sites/greglicholai/2025/02/03/

inflation-reduction-act-unintended-consequences-for-medicalinnovation/.

at a time when such review will be most effective and

meaningful. Review is warranted now.

CONCLUSION

The petition should be granted.

SAMIR DEGER-SEN

S.Y. JESSICA HUI

NIKITA KANSRA

LATHAM & WATKINS LLP

1271 Avenue of the

Americas

New York, NY 10020

Respectfully submitted,

GREGORY G. GARRE

Counsel of Record

DANIEL MERON

CHRISTINA R. GAY

LATHAM & WATKINS LLP

555 11th Street, NW

Suite 1000

Washington, DC 20004

(202) 637-2207

gregory.garre@lw.com

Counsel for Petitioner

January 23, 2026