ST. PAUL, Minn. (CN) — A Minnesota federal judge put a challenge to the state’s program creating an insulin safety net for poor diabetics to bed Monday, dismissing a case brought by a lobbying group for manufacturers of the lifesaving hormone.
Senior U.S. District Judge David Doty, a Ronald Reagan appointee, granted summary judgment to the state and dismissed a suit by the Pharmaceutical Research and Manufacturers of America (PhRMA) seeking to overturn the Alec Smith Insulin Affordability Act. The judge ruled his court lacked subject-matter jurisdiction and proposed amendments to the lobbyists’ complaint would not save it.
The law, named after a 26-year-old Minneapolis man who died in 2017 after the hefty price tag for diabetes treatment forced him to ration his insulin, allows qualifying diabetics to pay $35 or less to get a 30-day supply from their pharmacy. It went into effect in July 2020 and was one of the few pieces of legislation passed by Minnesota’s sharply divided government in 2019, with several Republican cosponsors signing on to the largely Democratic effort.
Governor Tim Walz and Democratic legislators said they had passed a diluted version of their original bill because Republicans assured them it would avoid lawsuits from the industry. PhRMA proved that assertion wrong, filing suit on the day the bill went into effect. The group claimed the law violates the Takings and Commerce Clauses of the U.S Constitution by requiring PhRMA’s members, the nation’s largest insulin manufacturers, to provide insulin at a reduced cost.
“We are in a situation in which obviously the insulin is not the product of any program Minnesota has put in place. They’re simply trying to take away the insulin,” PhRMA’s attorney Joseph Guerra with the firm Sidley Austin said in remote arguments before Doty early in December. “The state does not have any sovereign right to continue, week after week, month after month, year after year, violating the takings clause.”
Assistant Attorney General Sarah Krans argued that similar programs by the manufacturers prevented the law from creating a taking, and that even if it was a taking, it would be compensable through inverse-condemnation proceedings. She also argued that PhRMA didn’t have standing, the individual defendants it named were not appropriate authorities to sue, and that the case didn’t belong in federal court.
In his ruling Monday, Doty agreed with Krans.
“Just compensation remedies are available in Minnesota through inverse condemnation actions in state court,” he wrote, finding that that fact precludes the takings claim.
PhRMA’s argument that those proceedings were inadequate to address continuous or future takings did not fare well with him either.
“A ‘future taking’ — or a taking that has not happened yet — does not give rise to a claim under the Takings Clause,” Doty wrote. “The government does not need to compensate for property it has not yet taken.”
That PhRMA’s members would have to bring multiple actions, Doty wrote, did not preclude adequate compensation, and he expressed reluctance to go against established case law barring declaratory relief for takings claims. The organization, he wrote, therefore lacked standing.
PhRMA’s dormant Commerce Clause claim went down with the Takings Clause claim, with Doty noting that PhRMA did not counter the state’s arguments that it was derivative of the takings claim. He also denied a motion by the lobbying group to amend its complaint, which PhRMA filed early in October in response to a motion to dismiss.
Guerra sought to add information about insulin already provided in the months since the law took effect in order to defeat possible ripeness arguments by the state.
“PhRMA has standing and that its takings claim is ripe because (1) the complaint alleged that certain PhRMA members faced imminent, or certainly impending, injuries from the Act, which was clearly designed to compel unconstitutional takings of insulin,” he wrote in a memorandum at the time. “And (2) those injuries have in fact occurred since the Act’s provisions went into effect.”
Doty declined to address this in much detail, denying it as futile. “As explained above, the court dismisses the complaint on separate grounds, and PhRMA’s proposed amendments will not overcome the complaint’s deficiencies,” he wrote.
Minnesota Attorney General Keith Ellison celebrated the ruling in a statement Monday evening.
"No one should have to choose between affording their lives and affording to live. The legislature passed the Alec Smith Insulin Affordability Act so that no Minnesotan would have to die like Alec did when he could not afford the medication that kept him alive,” he said. “I'm gratified the court saw through Big Pharma's meritless challenge to the law and dismissed the case."
He also praised Alec’s mother, Nicole Smith-Holt, for her crusade to get the law passed. “Barely a day goes by when I don’t admire the fight that Nicole took on to make sure that no other Minnesota family ever suffers a loss like hers. She channeled her mother’s grief over losing her son into saving the lives of sons and daughters and mothers and fathers in every corner of Minnesota. This win today is her win.”
PhRMA representatives could not be immediately reached for comment.
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