NCLA urges the Third Circuit to rule it is unlawful for the Department of Health and Human Services (HHS) to hold a company’s business hostage until it surrenders its constitutional property rights. NCLA’s brief explains how the law at issue violates the “unconstitutional conditions” doctrine, which prevents the indirect trampling of constitutional rights.

Two years ago, Congress enacted the Inflation Reduction Act of 2022, part of which sought to lower Medicare drug costs. Instead of achieving this important goal lawfully, it chose an approach that cannot be reconciled with our Constitution. The Medicare cost reduction program’s goal is to force pharmaceutical companies to sell their products at less than market value. It cannot do so directly without violating the Takings Clause of the Fifth Amendment. So, it tells companies: Either forfeit your constitutional right or pay excise taxes and penalties on your products that are so draconian they will destroy your business. In other words, as clichéd mafia movies might put it: “Nice business you got there; Be a shame if anything happened to it.” The U.S. Supreme Court has already spoken to this type of quintessentially underworld behavior, choosing the descriptive word “extortion.”

It may be politically popular, albeit short-sighted, to curtail the constitutional rights of big companies that lay golden eggs, but if Congress can do this to the pharmaceutical companies, then it can do it to mom-and-pop businesses, too. NCLA knows Americans deserve better than a Congress that engages in extortionate behavior. But more importantly, they have a right to be free of even sophisticated attempts to undermine our Constitution.