Amgen Inc. recently filed a lawsuit in the United States District Court District of Colorado against the State of Colorado’s Prescription Drug Affordability Board over the Board’s efforts to potentially cap the price of its drug Enbrel. Amgen argues in its complaint that the moves by the Board are unconstitutional for at least four reasons.
The Prescription Drug Affordability Board (PDAB) was created in 2021 and charged with lowering prescription costs for Coloradans. As part of its reach, the Board can review prescription drugs and set upper payment limits (essentially price caps) on drugs it considers unaffordable. In February 2024, the Board voted unanimously to declare Enbrel an unaffordable drug. That vote started a six-month process that may allow Colorado to place a price cap on the prescription drug. After those six months, an upper limit will be set and six months later, the price regulation would take effect.
In response to the Board’s vote, Amgen filed a lawsuit in Colorado to stop Enbrel from being declared unaffordable and a price cap being implemented. Amgen argues that the law and the Board violates the United States Constitution and potentially even Medicare laws and that the decision by the Board “puts in jeopardy access to Enbrel and other innovative drugs, endangering the lives and well-being of thousands of Coloradans with serious medical conditions.”
Amgen alleges that the law that created the Board is in violation of the Supremacy Clause because it conflicts with federal patent laws, including the Hatch-Waxman Act. Amgen further alleges violations of the Supremacy Clause as the Colorado law applies the “upper payment limit” to encompass federal payors, such as Medicare, interfering with the federal government’s ability to control its own payment and coverage decisions.
Amgen also alleges a violation of the Due Process clause because of a lack of procedural protections to guide the Board’s decision-making and to avoid the imposition of arbitrary, confiscatory, or other constitutionally-appropriate prices.
Amgen notes that while the law allows the Board to declare certain prescription drugs “unaffordable for Colorado consumers” and then place an “upper payment limit” on the drug, it does not provide any standards, definitions, or guidance to constrain the Board’s decisions about what it means for a drug to be “unaffordable” and what the “upper payment limit” for a drug should be.
Finally, Amgen argues that the law is in violation of the Commerce Clause as it regulates commercial transactions that take place outside of the state of Colorado. The complaint notes that the Colorado law applies even to “upstream” transactions, which are transactions that take place entirely outside of Colorado but where the drug is later dispensed or administered in Colorado.
“To incentivize the immense risk-taking and investment necessary to discover and develop new medical treatments, Congress has established a carefully calibrated intellectual property regime that rewards pharmaceutical innovation with a period of market exclusivity and the ability to charge prices that allow for further investment and innovation during that period,” the lawsuit states.
In its complaint, Amgen is seeking not just to overturn the decisions of the Board relating to Enbrel but also strike down parts of the law that created the Board.