In recent months, pharmaceutical manufacturers have brought legal challenges to a provision of the 2022 Inflation Reduction Act (IRA) empowering the federal government to negotiate the prices Medicare pays for certain prescription medications. One key argument made in these filings is that price negotiation is a “taking” of property and violates the Takings Clause of the US Constitution. Through original case law and health policy analysis, we show that government price negotiation and even price regulation of goods and services, including patented goods, are constitutional under the Takings Clause. Finding that the IRA violates the Takings Clause would radically upend settled constitutional law and jeopardize the US’s most important state and federal health care programs.

This RCD discusses a recent decision by the United States Court of Appeals for the First Circuit that struck down Puerto Rico’s Act 90-2019, which aimed to regulate pay structures for Medicare Advantage insurers in Puerto Rico. The court found that the provision in Act 90, known as the “Mandated Price Provision,” is preempted by federal law. However, the author argues that the court’s decision did not adequately consider the congressional intent of the Medicare Advantage Act in weighing the public health crisis in Puerto Rico. The RCD provides background on the Medicare Advantage program and Act 90 and explains how Act 90 aimed to eliminate insurers’ practice of paying providers at rates below the CMS’s minimum reimbursement rates under the traditional Medicare program. The article concludes that the court’s decision inadequately considered the larger purpose of the Medicare Advantage Act and the relevant public health crisis in Puerto Rico.