Drug Price Negotiations Pose Ruinous, Unconstitutional Dangers

The US government’s drug price negotiation program will endanger the next breakthrough cancer cure, Alzheimer’s treatment, or life-extending therapy—not because science or medicine failed, but because the law allowed the government to trample constitutional rights.

On Aug. 6, the US Court of Appeals for the Sixth Circuit unfortunately dismissed a pivotal case challenging the program on grounds that the plaintiffs—the US Chamber of Commerce—lacked associational standing.

The panel’s decision in Dayton Area Chamber of Commerce v. Kennedy to sidestep the case’s merits was a disappointing misstep—as it appears they have failed to recognize the gravity of its constitutional deficiencies.

That is because what’s at stake is more than a fight over drug pricing policies. The Inflation Reduction Act’s Medicare “negotiation” program is, at its core, a sweeping federal mandate that disregards core constitutional safeguards.

These negotiations should be recognized as a sham. Pharmaceutical innovators are forced, under threat of financial penalties as high as 1,900% of daily revenue from all sources, to sell their patented medicines at government-dictated prices. This isn’t bargaining—it’s a coercive regime of price control masquerading as negotiation.

The government’s price controls already are having dramatic and harmful effects on innovation. The evidence is sobering. Companies such as Bristol Myers Squibb and Eli Lilly have scaled back cancer research, and AstraZeneca has warned it may defer new launches.

Layoffs and reduced research and development budgets are widespread, as the ability to subsidize risky new research with revenue from successful drugs has been depleted.

It costs, on average, $2.3 billion to develop a single new therapy, and roughly 90% of drug candidates fail in clinical development. If government-mandated discounts destroy the financial incentive for this work, patients will lose. The cures for tomorrow’s diseases simply won’t exist.

The disincentive is especially acute for follow-on research, which is when manufacturers invest in expanding a drug’s approved uses to new and often rare indications. This research is now penalized by the government’s formulas. As a result, patients with rare disorders and high unmet needs, such as those with certain cancer or genetic conditions that lack effective treatments, stand to suffer most.

The constitutional violations are egregious and numerous. Industry challengers have alleged this program constitutes a massive transfer of private property, all but dressed up as a negotiation, amounting to either a regulatory or per se taking under the Fifth Amendment.

Federal law also requires companies to publicly endorse these prices as “fair,” chilling free speech and violating the First Amendment.

The penalties for refusal are so excessive that they stand in direct conflict with the Eighth Amendment’s ban on disproportionate fines. Due process vanishes, as manufacturers are denied basic procedural protections: no meaningful standards, no real recourse, and virtually no chance to challenge arbitrary administrative decisions.

Perhaps most worrisome, the law hands unprecedented, unchecked power to a federal agency to dictate terms and enforce penalties in ways that raise serious questions under the doctrine of separation of powers.

Such concentration of authority, with minimal accountability, offends not just industry, but the foundations of democratic governance.

These vital constitutional questions can’t be sidestepped or minimized. When the structure of US government and the basic rights of property, speech, and due process hang in the balance, the judiciary has an obligation to give those arguments their full and fair day in court.

But like with the Sixth Circuit’s recent decision, the courts so far have brushed aside these claims, often on procedural grounds or by minimizing the severity of the penalties and coercion drugmakers face. That alone makes clear that the stakes go well beyond ordinary regulatory wrangling.

These questions demand careful attention—perhaps from the full circuit court, should the plaintiffs pursue a rehearing en banc—not merely for the future of the pharmaceutical industry, but for the precedents that will govern the limits of federal power for generations to come. Any shortcut risks leaving the finest traditions of US law and innovation at the mercy of expediency.

This is a moment for the courts to reaffirm that constitutional principles are not optional, especially when Congress and the executive branch claim unprecedented powers for our own good.

For the sake of innovation, patients, and the integrity of America’s constitutional order, these issues must not be swept aside. They deserve—and require—the most searching judicial scrutiny possible.

The case is Dayton Area Chamber of Comm. v. Kennedy, 6th Cir., No. 24-03868, opinion 8/6/25.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Daniel Troy is a former chief counsel of the Food and Drug Administration and a former general counsel of GlaxoSmithKline. He also is a member of the Board of Directors of the US Chamber Litigation Center, a party in this case.

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