Pharmaceutical Research and Manufacturers of America v. Williams

Background

Pharmaceutical Research and Manufacturers of America (PhRMA), a nonprofit corporation representing pharmaceutical companies, sued members of the Board of Pharmacy in their official capacities. The lawsuit challenges the Alec Smith Insulin Affordability Act, which requires manufacturers to provide insulin for free to Minnesota residents who meet specified criteria. PhRMA alleges that complying with the Act will cause significant expenses and may expose it to penalties. It seeks declaratory and injunctive relief under the Fifth Amendment’s Takings Clause.

The district court previously dismissed the complaint for lack of standing. The Eighth Circuit reversed and remanded, holding that PhRMA had standing and could seek equitable relief on behalf of its members. The Eighth Circuit also concluded that PhRMA alleged a per se physical taking rather than a regulatory taking, so an individualized factual inquiry into the Act’s effect on each member was unnecessary. The opinion states that the remaining issue is whether the Act takes private property for public use without just compensation.

Discovery Dispute

On remand, the defendants asserted, among other defenses, that PhRMA’s members had created a public nuisance that the Act sought to abate and had agreed to the Act’s requirements in exchange for the benefit of Minnesota drug-manufacturer licenses. Magistrate Judge David S. Schultz determined that those defenses were not viable. He also determined that discovery did not need to address the factors for obtaining injunctive relief because the Eighth Circuit had already ruled that PhRMA could seek such relief without an individualized inquiry into its members’ harm.

The parties proposed significantly different discovery plans. PhRMA sought eighteen months of discovery, including unlimited third-party discovery. The defendants argued for narrower discovery completed in three months. Magistrate Judge Schultz ordered fact discovery to be completed by May 8, 2024.

Standard of Review

The district court reviewed the rulings rejecting the affirmative defenses and excluding discovery about injunctive-relief factors de novo, meaning it independently reconsidered those issues. It reviewed the discovery timeline for clear error, a more deferential standard that asks whether the magistrate judge made a definite mistake.

Rulings

The court upheld the rejection of the public-nuisance defense. It agreed that the facts did not support applying public-nuisance law to the pricing of a legal, beneficial medicine.

The court also upheld the rejection of the licensing-benefit defense. It agreed that the Act’s requirement to provide free insulin was not tied to the manufacturers’ licensing benefit because noncompliance would result in a fine rather than loss of a manufacturing license. The Act also did not eliminate the manufacturers’ existing right to sell insulin; it required them additionally to provide free insulin to people in need.

The court ruled that further discovery into the injunctive-relief factors, including the balance of harms, would be unnecessary. It relied on the Eighth Circuit’s ruling that PhRMA could seek injunctive relief without an individualized inquiry into harm to its members.

The court did not change the substance of the discovery order. It noted, however, that the discovery dates might need to be amended by Magistrate Judge Schultz because the objection process had delayed the pretrial schedule.

Disposition

The court ordered that the objection/appeal to Magistrate Judge Schultz’s orders was overruled.