April 15, 2020

Governor Tim Walz

130 State Capitol
75 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155

Re: Conference Committee Report on House File 3100

Dear Governor Walz:

PhRMA understands that you signed the Conference Committee Report on House File 3100 (HF 3100)
into law this morning, but we are writing nonetheless to express our concerns about the legality of HF
3100. PhRMA represents the country’s leading innovative biopharmaceutical research and
biotechnology companies, which are devoted to discovering and developing medicines that enable
patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies
have invested more than $900 billion in the search for new treatments and cures. This investment in
innovation has greatly improved the effectiveness of products—including insulin—that are available
today.

PhRMA recognizes that too many patients struggle to afford insulin and other medicines at the
pharmacy counter. However, HF 3100 ignores the robust programs that insulin manufacturers already
offer to help patients access needed insulin, and PhRMA does not believe that HF 3100 offers a viable
solution to the problems of insulin access and affordability. HF 3100 directs manufacturers to provide
insulin to pharmacies and patients without compensation. As explained below, that confiscatory
scheme is a textbook example of a per se taking under the Fifth Amendment of the U.S. Constitution and
could hinder access to and chill development of life-saving insulin-based treatments, undermining the
patient access goals it is intended to serve.

The Fifth Amendment Protects Pharmaceutical Products, Including Insulin.

The Fifth Amendment prohibits the government from “tak[ing]” private property without paying “just
compensation” to the owner. As the U.S. Supreme Court has recognized, “the plain language of the
Takings Clause ‘requires the payment of compensation whenever the government acquires private
property for a public purpose.’” 1

1
Murr v. Wisconsin, 137 S. Ct. 1933, 1942 (2017) (applying Fifth Amendment to state governments).
Agriculture. 1 This protection is a core element of our Nation’s legal fabric and traces its roots “back at
least 800 years to the Magna Carta, which specifically protected” products such as “agricultural crops from
uncompensated takings” by the government. 2

HF 3100 Imposes an Unconstitutional Per Se Taking.

The bill creates two new programs: (1) the urgent-need safety net program and (2) the continuing safety
net program. The urgent-need program requires pharmacies to immediately provide qualifying
individuals a 30-day supply of insulin, and permits pharmacies to bill the insulin manufacturer or require
the manufacturer to send “a replacement supply” of the product dispensed. Similarly, the continuing
safety net program entitles qualifying individuals to receive 90-day supplies of insulin on an ongoing basis,
and requires manufacturers to provide this insulin “at no charge.” The State would not compensate
manufacturers for the insulin provided under these programs, and the bill prohibits manufacturers from
“seek[ing] any reimbursement or other compensation” from other sources.

The upshot is that HF 3100 requires manufacturers to give away their insulin for free, without any
compensation whatsoever. That mandate constitutes a per se taking under the Fifth Amendment, and
there is a significant probability that a court would enjoin enforcement of the bill on that basis.

Horne confirms that conclusion. There, the Court held that a law requiring raisin growers to transfer a
portion of their crops to the government constituted an unlawful per se taking. Like the law addressed in
Horne, HF 3100 requires manufacturers to transfer insulin to third parties, causing manufacturers to “lose
the entire ‘bundle’ of property rights in the appropriated” insulin. This requirement to “turn over”
products for third-party use constitutes “a taking without regard to other factors a court might ordinarily
examine.” Although there is a pressing need to provide greater access to affordable insulin, “a strong
public desire to improve the public condition is not enough to warrant achieving the desire by a shorter
cut than the constitutional way.” 3

Horne also underscores that selling commercial products in interstate commerce is “not a special benefit
that the Government may” condition on “the waiver of constitutional protection.” 4 As a result, HF 3100’s
“mandate to relinquish specific, identifiable property as a ‘condition’ on permission to engage in
commerce effects a per se taking.” 5

1
135 S. Ct. 2419, 2425-26 (2015).
2
Id. at 2426.
3
All quotations in this paragraph refer to Horne, 135 S. Ct. at 2428. The fact that HF 3100 requires manufacturers
to provide insulin to pharmacies and patients, rather than the government, does not affect the analysis. See, e.g.,
E. Enterprises v. Apfel, 524 U.S. 498, 524 (1998) (plurality op.) (applying takings analysis in third-party benefit
context).
4
Horne, 135 S. Ct. at 2430-31; see Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 439 n.17 (1982).
5
Id. at 2430. The exemption for products with a wholesale acquisition cost of $8 or less per milliliter likewise does
not affect the analysis because (1) the cost of nearly all insulin products in current use is considerably higher and (2)
the $8 per milliliter cost would constitute an unconstitutionally confiscatory rate cap under longstanding precedent.
See, e.g., Duquesne Light Co. v. Barasch, 488 U.S. 299, 308 (1989) (where rate set by law “does not afford sufficient
compensation, the State has taken the [regulated] property without paying just compensation”).