Boehringer Ingelheim Pharms., Inc. v. Dep’t of Health & Hum. Servs.

24-2092
Boehringer Ingelheim Pharms., Inc. v. Dep’t of Health & Hum. Servs.
In the
United States Court of Appeals
For the Second Circuit
August Term, 2024
No. 24-2092
B OEHRINGER INGELHEIM PHARMACEUTICALS , INC.,
Plaintiff-Appellant,
v.
U NITED S TATES D EPARTMENT OF H EALTH AND H UMAN
S ERVICES , ROBERT F. K ENNEDY , JR ., in his official capacity as Secretary
of Health and Human Services, C ENTERS FOR MEDICARE AND
MEDICAID S ERVICES , MEHMET O Z , in his official capacity as
Administrator of Centers for Medicare and Medicaid Services,
Defendants-Appellees.∗
On Appeal from a Judgment of the United States District Court for
the District of Connecticut.
A RGUED: A PRIL 3, 2025
D ECIDED: A UGUST 7, 2025
Before: L EVAL , B IANCO , and NARDINI, Circuit Judges.
∗ The Clerk of Court is respectfully directed to amend the official caption
as set forth above.

-- 1 of 49 --

2
The Inflation Reduction Act of 2022 (the “IRA”) authorized the
creation of the Medicare Drug Price Negotiation Program (the
“Negotiation Program”) to limit the federal government’s spending
on prescription drugs under Medicare. Under the statute, the Centers
for Medicare and Medicaid Services (“CMS”) must select a certain
number of the highest-expenditure drugs for participation in the
program each year. For the initial 2026 pricing period, CMS selected
ten drugs, including Jardiance, which is produced by Plaintiff-
Appellant Boehringer Ingelheim Pharmaceuticals, Inc.
(“Boehringer”).
Boehringer signed an agreement with CMS to participate in the
Negotiation Program, but it did so “under protest” and at the same
time commenced this lawsuit against the government. Boehringer
raised five constitutional claims, alleging that the Negotiation
Program (1) violates its Fifth Amendment right to procedural due
process, (2) effects a per se physical taking of its Jardiance product in
violation of the Fifth Amendment, (3) compels speech in violation of
the First Amendment, (4) violates the Excessive Fines Clause of the
Eighth Amendment, and (5) unconstitutionally conditions its
participation in Medicare and Medicaid on the relinquishment of its
constitutional rights. The company also alleged that CMS violated
the Administrative Procedure Act (the “APA”) and the Medicare Act
by issuing the standard agreement for the Negotiation Program
without following notice-and-comment procedures. The district

-- 2 of 49 --

3
court (Michael P. Shea, Chief Judge) granted summary judgment to the
defendants on all claims.
Boehringer appeals the district court’s dismissal of its claims
under the First and Fifth Amendments and the APA. We agree with
the district court’s principal conclusions that: (1) Boehringer’s direct
constitutional claims fail because, under Garelick v. Sullivan, 987 F.2d
913 (2d Cir. 1993), participation in the Negotiation Program is
voluntary and thus does not entail an unlawful deprivation of rights;
(2) the program does not impose unconstitutional conditions on
Boehringer’s ability to participate in Medicare and Medicaid because
the program is designed to promote the legitimate government
purpose of controlling Medicare spending and does not regulate the
company’s conduct in the private market; and (3) the IRA expressly
authorized CMS to implement the program during its first three years
without following the APA’s notice-and-comment requirement.
Accordingly, the judgment of the district court is AFFIRMED.
MAXWELL A. B ALDI , Attorney, Appellate
Staff Civil Division, U.S. Department of
Justice (Michael S. Raab, Lindsey Powell,
Cathrine Padhi, Attorneys, Appellate Staff
Civil Division, U.S. Department of Justice,
Rachel H. Park, Acting General Counsel,
Joel McElvain, Acting Deputy General
Counsel, Janice L. Hoffman, Associate
General Counsel, U.S. Department of Health
and Human Services, on the brief), for Brian
M. Boynton, Principal Deputy Assistant

-- 3 of 49 --

4
Attorney General, U.S. Department of
Justice, Washington, DC, for Defendants-
Appellees.
K EVIN F. K ING (Robert A. Long, Jr., Thomas
R. Brugato, Bradley E. Ervin, Michael M.
Maya, Daniel G. Randolph, MaKade C.
Claypool, on the brief), Covington & Burling
LLP, Washington, DC; A SHLEY C. PARRISH ,
King & Spalding LLP, Washington, DC, for
Plaintiff-Appellant.
D. Adam Candeub, Okemos, MI; Richard A.
Epstein, Norwalk, CT; May Mailman,
Independent Women’s Law Center,
Winchester, VA; Benjamin M. Flowers,
Ashbrook Byrne Kresge LLC, Cincinnati,
OH, for Amicus Curiae Independent
Women’s Law Center, in support of Plaintiff-
Appellant.
Alexandra Lu, Goodwin Procter LLP,
Boston, MA; Brian T. Burgess, Rohiniyurie
Tashima, Goodwin Procter LLP,
Washington, DC, for Amicus Curiae Teva
Pharmaceuticals USA, Inc., in support of
Plaintiff-Appellant.
Lawrence S. Ebner, Atlantic Legal
Foundation, Washington, DC, for Amicus
Curiae Atlantic Legal Foundation, in support
of Plaintiff-Appellant.

-- 4 of 49 --

5
Tyler Martinez, National Taxpayers Union
Foundation, Washington, DC, for Amicus
Curiae National Taxpayers Union
Foundation, in support of Plaintiff-Appellant.
John W. Cerreta, Day Pitney LLP, Hartford,
CT; Stanley A. Twardy, Jr., Day Pitney LLP,
Stamford, CT; Frank J. Bailey, John C. La
Liberte, Pioneer Law Center, Boston, MA,
for Amicus Curiae Pioneer Public Interest
Law Center, in support of Plaintiff-Appellant.
Felicia H. Ellsworth, Wilmer Cutler
Pickering Hale and Dorr LLP, Boston, MA,
for Amicus Curiae Institute for Free Speech,
in support of Plaintiff-Appellant.
Jennifer B. Dickey, Andrew R. Varcoe, U.S.
Chamber Litigation Center, Washington,
DC; Kwaku A. Akowuah, Brenna E. Jenny,
Sidley Austin LLP, Washington DC, for
Amicus Curiae the Chamber of Commerce of
the United States of America, in support of
Plaintiff-Appellant.
Gregory Dolin, New Civil Liberties
Alliance, Arlington, VA, for Amicus Curiae
New Civil Liberties Alliance, in support of
Plaintiff-Appellant.

-- 5 of 49 --

6
Ilana H. Eisenstein, DLA Piper LLP (US),
Philadelphia, PA, for Amicus Curiae Daniel E.
Troy, Former Chief Counsel to the U.S. Food
and Drug Administration, in support of
Plaintiff-Appellant.
Neil Lloyd, Imron T. Aly, Kevin M. Nelson,
Joel M. Wallace, ArentFox Schiff LLC,
Chicago, IL, for Amicus Curiae Fresenius
Kabi, in support of Plaintiff-Appellant.
Lide Paterno, Akin Gump Strauss Hauer &
Feld LLP, Washington, DC, for Amicus
Curiae The Alliance for Aging Research, in
support of neither party.
Nandan M. Joshi, Allison M. Zieve, Public
Citizen Litigation Group, Washington, DC,
for Amici Curiae Public Citizen, Doctors for
America, Protect Our Care, and Families
USA, in support of Defendants-Appellees.
David A. Schulz, Tobin Raju, Media
Freedom & Information Access Clinic, Yale
Law School, New Haven, CT, for Amicus
Curiae Abrams Institute for Freedom of
Expression, in support of Defendants-
Appellees.
Elizabeth B. Wydra, Brianne J. Gorod, Nina
Henry, Constitutional Accountability
Center, Washington, DC, for Amicus Curiae

-- 6 of 49 --

7
Constitutional Accountability Center, in
support of Defendants-Appellees.
Ananda Burra, Benjamin Seel, Robin
Thurston, Democracy Forward Foundation,
Washington, DC, for Amici Curiae the
American Public Health Association, the
American College of Physicians, the Society
of General Internal Medicine, the American
Geriatrics Society, and the American Society
of Hematology, in support of Defendants-
Appellees.
Kelly Bagby, Rebecca Rodgers, William
Alvarado Rivera, AARP Foundation,
Washington, DC, for Amici Curiae AARP,
AARP Foundation, Justice in Aging, the
Center for Medicare Advocacy, and the
Medicare Rights Center, in support of
Defendants-Appellees.
Michael Lieberman, Rucha A. Desai,
Fairmark Partners, LLP, Washington, DC,
for Amicus Curiae Patients for Affordable
Drugs, in support of Defendants-Appellants.
Hannah W. Brennan, Sophia K. Weaver,
Hagens Berman Sobol Shapiro LLP, Boston,
MA, for Amici Curiae Center for American
Progress, NAACP, Unidos US Action Fund,
and the Century Foundation, in support of
Defendants-Appellees.

-- 7 of 49 --

8
Hannah W. Brennan, Claudia Morera,
Rebekah Glickman-Simon, Hagens Berman
Sobol Shapiro LLP, Boston, MA, for Amici
Curiae Law Scholars, in support of Defendants-
Appellees.
William B. Schultz, Margaret M. Dotzel,
Alyssa Howard Card, Zuckerman Spaeder
LLP, Washington, DC, for Amici Curiae
Nationally Recognized Healthcare and
Medicare Experts, in support of Defendants-
Appellees.
W ILLIAM J. NARDINI, Circuit Judge:
Reversing a nearly twenty-year policy that prevented the
Centers for Medicare & Medicaid Services (“CMS”), which
administers the Medicare program, from negotiating the prices of
drugs purchased for the Medicare program, the Inflation Reduction
Act of 2022 (the “IRA”) authorized the creation of the Medicare Drug
Price Negotiation Program (the “Negotiation Program”) to limit the
federal government’s spending on prescription drugs under
Medicare. CMS is required to pick a certain number of the highest-
expenditure drugs—subject to other criteria, including a lack of
generic competitors—for participation in the program each year,
beginning with 2026. The IRA sets price ceilings for the selected
drugs—ranging from 40 to 75 percent of the average price paid by
wholesalers in the private market—and requires CMS and the drug

-- 8 of 49 --

9
manufacturers to agree to a statutorily defined “maximum fair price,”
which must reflect factors such as the research and development costs
of the drug. For the initial 2026 pricing period, CMS chose ten drugs,
including Jardiance, which is produced by Plaintiff-Appellant
Boehringer Ingelheim Pharmaceuticals, Inc.
Boehringer signed an agreement with CMS to participate in the
Negotiation Program, but it did so “under protest” and at the same
time brought this lawsuit against CMS; the U.S. Department of Health
and Human Services, of which CMS is a constituent agency; and the
leaders of both agencies. Boehringer raised five constitutional claims,
alleging that the Negotiation Program (1) violates its Fifth
Amendment right to procedural due process, (2) effects a per se
physical taking of its Jardiance product in violation of the Fifth
Amendment, (3) compels speech in violation of the First Amendment,
(4) violates the Excessive Fines Clause of the Eighth Amendment, and
(5) unconstitutionally conditions its participation in Medicare and
Medicaid on the relinquishment of its constitutional rights. The
company also alleged that CMS violated the Administrative
Procedure Act (the “APA”) and the Medicare Act by issuing the
standard agreement for the Negotiation Program without following
notice-and-comment procedures. In a careful and comprehensive
opinion, the district court (Michael P. Shea, Chief Judge) granted
summary judgment to the defendants on all claims.
Boehringer appeals the district court’s dismissal of its claims
under the First and Fifth Amendments and the APA. We agree with
the district court’s principal conclusions that: (1) Boehringer’s direct

-- 9 of 49 --

10
constitutional claims fail because, under Garelick v. Sullivan, 987 F.2d
913 (2d Cir. 1993), participation in the Negotiation Program is
voluntary and thus does not entail an unlawful deprivation of rights;
(2) the program does not impose unconstitutional conditions on
Boehringer’s ability to participate in Medicare and Medicaid because
the program is designed to promote the legitimate government
purpose of controlling Medicare spending and does not regulate the
company’s conduct in the private market; and (3) the IRA expressly
authorized CMS to implement the program during its first three years
without following the APA’s notice-and-comment requirement.
Accordingly, the judgment of the district court is AFFIRMED.
I. Background
A. The Medicare Drug Price Negotiation Program
Medicare is a federal medical insurance program for people
aged sixty-five and older and for certain younger people with
disabilities. See 42 U.S.C. § 1395 et seq. The program is administered
by CMS, a constituent agency of the U.S. Department of Health and
Human Services (“HHS”). The Medicare statute is divided into five
“Parts,” lettered A through E, which establish the terms of benefits
provided under the program. As relevant here, Part B is a voluntary
supplemental insurance program that covers outpatient care,
including certain prescription drugs that are typically administered
by a physician, and Part D is a voluntary prescription drug benefit
program that subsidizes the cost of prescription drugs and
prescription drug insurance premiums. See 42 C.F.R. §§ 410.28,

-- 10 of 49 --

11
423.120. Part D “operates as a public-private partnership between
[CMS] and . . . private insurance companies called ‘Sponsors’ that
administer prescription drug plans.” United States ex rel. Spay v. CVS
Caremark Corp., 875 F.3d 746, 749 (3d Cir. 2017). Under Part D,
insurers negotiate drug prices with manufacturers, and then CMS
pays the insurers fixed amounts based on their anticipated drug
spending.
When Congress enacted Medicare Part D in 2003, it barred CMS
from negotiating, or otherwise attempting to influence, the price of
drugs covered by the program. Specifically, Congress provided that
CMS “may not interfere with the negotiations between drug
manufacturers and pharmacies and . . . sponsors,” and “may not . . .
institute a price structure for the reimbursement of covered part D
drugs.” 42 U.S.C. § 1395w-111(i)(1), (3) (2003). Nearly two decades
later, Congress created an exception to that non-interference
provision via the Inflation Reduction Act of 2022, Pub. L. No. 117-169,
136 Stat. 1818 (codified in pertinent part at 42 U.S.C. §§ 1320f–1320f-7
and 26 U.S.C. § 5000D), which authorized the Secretary of Health and
Human Services to establish a Negotiation Program to limit the cost
of certain drugs under Medicare Parts B and D.1
1 The Secretary delegated authority to administer the Negotiation Program
to CMS. We therefore refer to CMS when discussing the program.

-- 11 of 49 --

12
1. The Drug Selection Phase
The Negotiation Program operates in annual drug-pricing
cycles in which CMS selects participating drugs and negotiates prices
for a given calendar year (“pricing period”), beginning with 2026.
42 U.S.C. § 1320f(b). During each cycle, CMS first must identify
negotiation-eligible drugs, which must have no generic or biosimilar
competitors; must have been approved or licensed for at least seven
years; and must rank among the fifty drugs with the highest total
expenditures under either Medicare Part B or Part D over a recent
twelve-month period. See 42 U.S.C. § 1320f-1(d), (e).2 Next, CMS
must select and publish a list of the negotiation-eligible drugs with
the highest expenditures that will be subject to negotiation for that
drug-pricing cycle. Id. § 1320f-1(a), (b)(1)(B). The statute requires the
selection of ten drugs for the 2026 pricing period, fifteen drugs for
2027 and 2028, and twenty drugs for 2029 and all subsequent pricing
periods. Id. § 1320f-1(a).
2. The Manufacturer Agreement
After completing the drug selection phase of a drug-pricing
cycle, CMS has to engage with the manufacturers of the selected
drugs to determine whether they intend to participate in the program.
CMS must “enter into agreements,” by specified deadlines, with the
2 The Negotiation Program applies only to drugs covered by Medicare Part
D for the 2026 and 2027 pricing periods. 42 U.S.C. § 1320f-1(a)(1)–(2), (d)(1).
Beginning with the 2028 pricing period, the program will also apply to drugs
covered by Medicare Part B. Id. § 1320f-1(a)(3)–(4), (d)(1).

-- 12 of 49 --

13
manufacturers that are willing to participate in negotiations. Id.
§§ 1320f(a)(2), 1320f-2. Pursuant to this directive, CMS set out to
create a standard agreement that could be used for negotiations with
the manufacturer of each selected drug. On March 15, 2023, CMS
issued initial guidance describing the possible contents of the
prospective agreement and “voluntarily solicit[ed] comments” on the
“[t]erms and conditions” that the agreement should contain. CMS,
Medicare Drug Price Negotiation Program: Initial Memorandum (Mar. 15,
2023), https://perma.cc/54JU-BQDP. In response to the comments
received on the initial guidance, CMS issued revised guidance on
June 30, 2023, which included the material terms of the negotiation
agreement. See Joint App’x 97–294. Finally, on July 3, 2023, CMS
issued a template of the Medicare Drug Price Negotiation Agreement
(the “Manufacturer Agreement”). Although CMS solicited comments
from the public in its March 15, 2023, guidance memorandum, the
agency did not conduct a formal notice-and-comment process before
issuing the agreement template.
Several provisions of the Manufacturer Agreement are relevant
here. For one, the agreement provides that “CMS and the
Manufacturer shall negotiate to determine . . . a maximum fair price
for the Selected Drug.” Joint App’x 297. The manufacturer agrees to
make that price available to “maximum fair price eligible
individuals,” hospitals, health care providers, pharmacies, and other
entities described in the IRA. Id.; see also 42 U.S.C. § 1320f(c)(2)
(defining “maximum fair price eligible individual”). Additionally,
the manufacturer must provide certain information to CMS about the

-- 13 of 49 --

14
drug, including the average price paid by wholesalers to the
manufacturer in the private market (the “private market price”) and
any other information that CMS requires for the negotiation process.
Joint App’x 297–98; see also 42 U.S.C. § 1320f-2(a)(4) (statutory
provision stating that the Manufacturer Agreement must require the
manufacturer to provide this information). 3 Any information
submitted by the manufacturer that CMS deems “proprietary
information” can be used only for the Negotiation Program. 42 U.S.C.
§ 1320f-2(c). The agreement also provides that the manufacturer, by
entering into the agreement, does not endorse CMS’s views or adopt
the statutory definitions of terms such as “maximum fair price” for
purposes other than carrying out the agreement. See Joint App’x 299.
Specifically, the disclaimer states:
In signing this Agreement, the Manufacturer does not
make any statement regarding or endorsement of CMS’
views, and makes no representation or promise beyond
its intention to comply with its obligations under the
terms of this Agreement with respect to the Selected
Drug. Use of the term “maximum fair price” and other
statutory terms throughout this Agreement reflects the
parties’ intention that such terms be given the meaning
specified in the statute and does not reflect any party’s
views regarding the colloquial meaning of those terms.
Id.
3 The deadline to submit that data during the initial negotiation period was
October 2, 2023. 42 U.S.C. § 1320f(d)(5)(A).

-- 14 of 49 --

15
3. The Negotiation Phase
Once CMS and the manufacturer of a selected drug execute the
Manufacturer Agreement, the negotiation phase begins. The IRA
directs CMS to negotiate a statutorily defined “maximum fair price[]”
for each selected drug. 42 U.S.C. § 1320f(a)(3). As an initial matter,
the manufacturer must provide CMS with the required data about the
selected drug. Id. §§ 1320f-3(b)(2)(A), 1320f(d)(5)(A). The negotiation
then proceeds in a familiar pattern: offer, acceptance or counteroffer,
response, and so on. But unlike typical negotiations, these have strict
parameters for pricing, and they end with CMS effectively getting the
final word.
CMS must make an initial offer as to the “maximum fair price”
that it will pay for the drug. The IRA establishes a price ceiling on the
maximum fair price based on the private market price of the selected
drug. See id. § 1320f-3(c). In general, CMS may not offer or agree to a
price that exceeds 75 percent of the private market price for any
selected drug. Id. Lower price ceilings apply to drugs that have been
approved or licensed for longer periods: 65 percent for drugs that
have been approved or licensed for at least 12 years, and 40 percent
for those that have been approved or licensed for at least 16 years. Id.
To determine the maximum fair price, CMS must consider several
factors, including the costs of researching, developing,
manufacturing, and distributing the drug; whether alternative
treatments are available; and the comparative effectiveness of any
such alternatives. Id. § 1320f-3(e). Save for an exception not relevant
here, there is no floor on the maximum fair price. Id. § 1320f-3(d).

-- 15 of 49 --

16
Within thirty days of receiving CMS’s initial offer, the
manufacturer must either accept that offer or make a written
counteroffer, which must be “justified based on the factors [specified
in the statute].” Id. § 1320f-3(b)(2)(C)(i)–(ii). If the manufacturer
makes a counteroffer, CMS must respond to it in writing. Id.
§ 1320f-3(b)(2)(D). CMS guidance provides that if CMS declines the
counteroffer, the agency and the manufacturer may schedule “[u]p to
three possible negotiation meetings” to “negotiate [the maximum fair
price] for the selected drug.” Joint App’x 187–88. During the initial
negotiation period, CMS was required to make its final maximum fair
price offer to the manufacturer by July 15, 2024, which the
manufacturer was required to respond to by July 31, 2024;
negotiations were to conclude by August 1, 2024.
The Manufacturer Agreement provides that if CMS and the
manufacturer agree to a maximum fair price, that price is
incorporated into the agreement through an addendum signed by the
manufacturer. Joint App’x 302 (addendum providing that “the
Manufacturer and CMS have engaged in negotiation of the price for
the Selected Drug,” and “the Manufacturer and CMS now agree to a
price for the Selected Drug”). If the manufacturer does not agree to a
maximum fair price by the deadline, it may incur “potential excise tax
liability,” as discussed below. Id. at 252; 26 U.S.C. § 5000D(b)(2). Once
the maximum fair price is set, that price will take effect at the
beginning of the first applicable pricing period and will continue to
apply during subsequent pricing periods until the selected drug is no

-- 16 of 49 --

17
longer eligible for the Negotiation Program or the price is
renegotiated. Id. §§ 1320f(b)(1)–(2), 1320f-1(c), and 1320f-3(f).
4. Civil Monetary Penalties and the Excise Tax
Under the IRA, manufacturers that sign the Manufacturing
Agreement but later violate certain statutory requirements are subject
to civil monetary penalties. For every unit of a selected drug that a
manufacturer sells at a price exceeding the maximum fair price, the
manufacturer must pay a penalty equal to ten times the difference
between the higher price and the maximum fair price. 42 U.S.C.
§ l320f-6(a). Additionally, any manufacturer that fails to submit
required information to CMS or otherwise fails to comply with the
Negotiation Program’s requirements must pay a penalty of $1,000,000
for each day of the violation. Id. §§ 1320f-6(c), 1320f-2(a)(4)–(5).
The IRA also authorizes an excise tax on sales of selected drugs
by manufacturers that do not sign the Manufacturer Agreement or
that fail to agree to a maximum fair price during negotiations with
CMS. 26 U.S.C. § 5000D(a)–(b). The tax is assessed for each day of
the “noncompliance periods,” which begin when the deadline to sign
the Manufacturer Agreement or to agree to a maximum fair price has
passed and generally end when the manufacturer reaches an
agreement with CMS. Id. § 5000D(b). The excise tax is imposed “on
the sale by the manufacturer . . . of any designated drug,” id.
§ 5000D(a), which the statute defines as “any negotiation-eligible
drug . . . included on the list [of drugs selected under 42 U.S.C.
§ 1320f-1(a) for the Negotiation Program] which is manufactured or

-- 17 of 49 --

18
produced in the United States or entered into the United States for
consumption, use, or warehousing,” id. § 5000D(e)(1).
5. Alternatives to the Penalties and Excise Tax
A manufacturer that does not wish to participate in the
Negotiation Program can avoid the excise tax by transferring
ownership of the selected drug to another entity, or withdrawing all
its products from Medicare and Medicaid. If, after signing the
Manufacturer Agreement, a manufacturer decides to transfer
ownership of the drug to another entity, it must notify CMS at least
thirty days before the transfer becomes effective, per CMS guidance.
Once the transfer becomes effective, any excise tax liability could be
imposed on the new owner. If the manufacturer instead chooses to
maintain ownership of the selected drug and withdraw all its
products from Medicare and Medicaid, the excise tax will be
“suspend[ed]” provided that (1) the manufacturer provides CMS
with notice of termination of certain Medicare and Medicaid
agreements, 26 U.S.C. § 5000D(c)(1)(A)(i), (c)(2)(B); and (2) none of the
manufacturer’s drugs are covered by the Medicare Coverage Gap
Discount Program Agreement or the Medicare Part D Manufacturer
Discount Program Agreement, 26 U.S.C. § 5000D(c)(1)(A)(ii).
A manufacturer may terminate its agreements under the
Medicare Coverage Gap Discount Program or the Medicare Part D
Manufacturer Discount Program “for any reason,” but the
termination will not become effective for eleven to twenty-three
months after CMS receives the termination notice. 42 U.S.C.

-- 18 of 49 --

19
§§ 1395w-114a(b)(4)(B)(ii), 1395w-l14c(b)(4)(B)(ii). Following the
enactment of the IRA, some manufacturers, citing the long period
before termination of those agreements can become effective,
petitioned CMS to permit immediate termination of the agreements
so that manufacturers could avoid the excise tax that they would
otherwise need to pay during the statutory pre-termination period.
To address this concern, CMS issued guidance establishing a process
for manufacturers “to expedite [their] termination” from the
Medicare programs. Joint App’x 99. By statute, CMS “may provide
for termination” of Medicare Coverage Gap Discount Program
agreements, and “shall provide for termination” of Manufacturer
Discount Program agreements, after just 30 days “for a knowing and
willful violation of the requirements of the agreement or other good
cause shown.” 42 U.S.C. §§ 1395w-114a(b)(4)(B)(i), 1395w-
114c(b)(4)(B)(i). The CMS guidance permits the manufacturer to
submit a notice to CMS stating its intent not to participate in the
Negotiation Program and requesting termination of its agreements
under Medicare and Medicaid. Upon receipt of such notice, “CMS
will find good cause to terminate the [manufacturer’s] agreement(s)
under the Medicare Coverage Gap Discount Program and the
Manufacturer Discount Program . . . pursuant to [42 U.S.C. §§ 1395w-
114a(b)(4)(B)(i), 1395w-114c(b)(4)(B)(i)].” Joint App’x 217; see also id.
(“CMS has determined . . . that it will automatically grant such
termination requests upon receipt, and that it will expedite the
effective date [of the termination so that it occurs thirty days after the
manufacturer gives notice].”). Thus, under this process, a

-- 19 of 49 --

20
manufacturer could withdraw from Medicare and Medicaid in as few
as thirty days after providing notice to CMS.
6. Preclusion of Judicial and Administrative
Review
The IRA precludes HHS and the federal courts from reviewing
CMS’s decisions regarding the selection and pricing of drugs for the
Negotiation Program. Specifically, the statute provides that “[t]here
shall be no administrative or judicial review” of (1) the determination
of which drugs are negotiation-eligible, (2) the selection of drugs for
the Negotiation Program, or (3) the final maximum fair price.
42 U.S.C. § 1320f-7(2)–(3).
B. Selection of Jardiance for the Negotiation Program
Pursuant to the IRA, CMS selected ten drugs for the initial 2026
pricing period, including Boehringer’s Jardiance product. 42 U.S.C.
§ 1320f-1(a)(1); HHS, HHS Selects the First Drugs for Medicare Drug
Price Negotiation (Aug. 29, 2023), https://perma.cc/A36P-Z88Z. The
deadlines for CMS and the manufacturers of the selected drugs to
enter into Manufacturer Agreements and for the manufacturers to
submit the required data for the selected drugs were October 1 and 2,
2023, respectively. See 42 U.S.C. § 1320f(d)(4)–(5), 1320f-2(a), and
1320f-3(b)(2)(A). On October 3, 2023, CMS announced that each of the
manufacturers, including Boehringer, had “chosen to participate in
the Negotiation Program” and had signed the Manufacturer
Agreement. CMS, Medicare Drug Price Negotiation Program:
Manufacturer Agreements for Selected Drugs for Initial Price Applicability

-- 20 of 49 --

21
Year 2026 (Oct. 3, 2023), https://perma.cc/3222-VPEE. In August 2024,
CMS announced that negotiations with Boehringer resulted in an
agreement on a maximum fair price for Jardiance equal to 34 percent
of its 2023 private market price. That price is scheduled to take effect
on January 1, 2026.
C. District Court Proceedings
On August 18, 2023, Boehringer commenced this suit against
HHS; Xavier Becerra, then-Secretary of Health and Human Services;
CMS; and Chiquita Brooks-Lasure, then-Administrator of CMS. 4
Boehringer raised five constitutional claims, alleging that the
Negotiation Program (1) violates its Fifth Amendment right to
procedural due process, (2) effects a per se physical taking of its
Jardiance product in violation of the Fifth Amendment, (3) compels
speech in violation of the First Amendment, (4) violates the Excessive
Fines Clause of the Eighth Amendment, and (5) unconstitutionally
conditions its participation in Medicare and Medicaid on the
relinquishment of its constitutional rights. Boehringer also alleged
that CMS violated the Administrative Procedure Act and the
Medicare statute by issuing legislative rules without notice and
comment. The parties subsequently cross-moved for summary
judgment.
4 Pursuant to Federal Rule of Appellate Procedure 43(c)(2), Secretary of
Health and Human Services Robert F. Kennedy, Jr., and CMS Administrator
Mehmet Oz are automatically substituted for their predecessors as defendants.

-- 21 of 49 --

22
In an order entered on July 3, 2024, the district court granted
summary judgment to the defendants. The court first concluded that
Boehringer’s Fifth Amendment takings and due process claims fail
because participation in the Negotiation Program is voluntary, and
thus Boehringer has not been illegally deprived of any property
interests. Next, the court dismissed Boehringer’s First Amendment
compelled speech claim, reasoning that because participation in the
Negotiation Program is voluntary, the Manufacturer Agreement “did
not ‘compel’ [Boehringer] to do anything.” Boehringer Ingelheim
Pharms., Inc. v. United States Dep't of Health & Hum. Servs., No. 23-CV-
01103 (MPS), 2024 WL 3292657, at *16 (D. Conn. July 3, 2024). The
court also dismissed Boehringer’s unconstitutional conditions claim,
largely for the reasons it set forth with respect to the direct
constitutional claims, and for the additional reason that “the
condition the government has imposed—that [Boehringer] sell the
drug for the maximum fair price—is closely related to the
government’s goal of controlling spending in the Medicare program.”
Id. at *19. Finally (as relevant here), the court dismissed Boehringer’s
APA claim, concluding that the IRA expressly permitted CMS “to
implement the [Negotiation] Program through guidance for the first
three negotiation cycles” and forgo the notice-and-comment
requirement that otherwise would have applied.5 Id. at *21.
5 In the district court, Boehringer also alleged that CMS violated the
Medicare Act’s notice-and-comment requirement (in addition to the APA’s) and
that the IRA’s excise tax violated the Excessive Fines Clause of the Eighth
Amendment. The district court also dismissed those claims, but Boehringer does
not raise them on appeal.

-- 22 of 49 --

23
II. Discussion
Boehringer raises six principal arguments on appeal. First, the
company argues that the Negotiation Program effects a per se taking
of its Jardiance products (that is, the physical doses of the drug) by
giving Medicare beneficiaries access to Jardiance on terms dictated by
the government, in violation of the Takings Clause of the Fifth
Amendment. Second, the company argues that the program violates
the Due Process Clause of the Fifth Amendment because, among
other reasons, the IRA bars administrative and judicial review of
CMS’s price-setting decisions. Third, the company argues that the
program violates its First Amendment right to free speech by
compelling the company to endorse the government’s
characterization of the program, including that the CMS-determined
price is the “maximum fair price.” Fourth, in connection with the
foregoing arguments, Boehringer contends that the district court
erroneously dismissed the company’s three direct constitutional
claims based on the incorrect conclusion that participation in the
Negotiation Program is voluntary. Fifth, Boehringer argues that even
if participation in the program were voluntary, the program would
violate the unconstitutional conditions doctrine because Congress
conditioned Boehringer’s ability to market any products through
Medicare and Medicaid on the company’s participation in the
program and relinquishment of its First and Fifth Amendment rights.
Finally, Boehringer argues that CMS violated the Administrative
Procedure Act by issuing the Manufacturer Agreement without
following notice-and-comment procedures.

-- 23 of 49 --

24
“We review a district court’s grant of summary judgment de
novo, construing the evidence in the light most favorable to the
nonmoving party and drawing all reasonable inferences in that
party’s favor.” Kuebel v. Black & Decker Inc., 643 F.3d 352, 358 (2d Cir.
2011). “Summary judgment is appropriate only if ‘there is no genuine
dispute as to any material fact and the movant is entitled to judgment
as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(a)).
The district court correctly granted summary judgment to the
government on all claims. Applying our holding in Garelick v.
Sullivan, 987 F.2d 913 (2d Cir. 1993), we conclude that participation in
the Negotiation Program is voluntary because there is no legal
compulsion to offer products or services through the program. We
therefore reject Boehringer’s argument that the Negotiation Program
directly violates the company’s rights under the First and Fifth
Amendments. Further, we conclude that the program does not
indirectly violate Boehringer’s constitutional rights under the
unconstitutional conditions doctrine because the requirements to
which Boehringer objects fall within Congress’s broad power to set
the terms of federally funded programs and have no bearing on the
company’s activity outside the contours of Medicare and Medicaid.
Lastly, we conclude that Boehringer’s APA claim fails because CMS’s
issuance of the Manufacturer Agreement fell within the IRA’s
exemption from the APA’s notice-and-comment requirement.

-- 24 of 49 --

25
A. Whether Participation in the Negotiation Program Is
Voluntary
The threshold question underlying Boehringer’s direct
constitutional claims is whether participation in the Negotiation
Program is voluntary. Under Garelick, the answer is yes.
In that case, a group of New York hospital-based
anesthesiologists challenged a federal law that limited the amount
they could charge under Medicare Part B to set percentages of the
Medicare-defined “reasonable” charge for their services. The
anesthesiologists argued that they were required to treat Medicare
patients under New York law and thus had no choice but to submit
to the Medicare price regulations. This regulatory scheme, they
argued, gave rise to a regulatory taking of their property interests in
their licenses and medical practices without just compensation, in
violation of the Fifth Amendment.6
We affirmed the dismissal of the anesthesiologists’ takings
claim on the ground that their participation in Medicare was in fact
6 “A regulatory taking . . . occurs where even absent a direct physical
appropriation, governmental regulation of private property ‘goes too far’ and is
‘tantamount to a direct appropriation or ouster.’” 1256 Hertel Ave. Assocs., LLC v.
Calloway, 761 F.3d 252, 263 (2d Cir. 2014) (quoting Lingle v. Chevron USA Inc.,
544 U.S. 528, 537 (2005)). In contrast, “[a] physical taking occurs when there is
either a condemnation or a physical appropriation of property.” Id.
The anesthesiologists in Garelick also raised a second takings theory that
has no bearing on this case, so we need not address it here. See Garelick, 987 F.2d
at 916.

-- 25 of 49 --

26
voluntary.7 We explained that “[a] property owner must be legally
compelled to engage in price-regulated activity for regulations to give
rise to a taking.” Garelick, 987 F.2d at 916 (citing Bowles v. Willingham,
321 U.S. 503, 517–18 (1944)). “By contrast,” we continued, “where a
service provider voluntarily participates in a price-regulated program
or activity, there is no legal compulsion to provide service and thus
there can be no taking.” Id. Applying these principles, we
determined that the anesthesiologists had no viable takings claim
because the challenged statute “d[id] not require anesthesiologists, or
7 Other circuits have recognized in various contexts that participation in
Medicare and Medicaid is voluntary. See, e.g., Baker Cnty. Med. Servs., Inc. v. U.S.
Atty. Gen., 763 F.3d 1274, 1279–80 (11th Cir. 2014) (explaining that participation in
Medicare is voluntary); Franklin Mem’l Hosp. v. Harvey, 575 F.3d 121, 130 (1st Cir.
2009) (provider participation in Medicaid is voluntary); Livingston Care Ctr., Inc. v.
United States, 934 F.2d 719, 720 (6th Cir. 1991) (“participation in the Medicare
program is a voluntary undertaking”); Minn. Ass’n of Health Care Facilities, Inc. v.
Minn. Dep’t of Pub. Welfare, 742 F.2d 442, 446 (8th Cir. 1984) (“Despite the strong
financial inducement to participate in Medicaid, a nursing home’s decision to do
so is nonetheless voluntary.”); St. Francis Hosp. Ctr. v. Heckler, 714 F.2d 872, 875
(7th Cir. 1983) (“provider participation [in Medicare] is voluntary”); see also Nat’l
Lifeline Ass’n v FCC, 983 F.3d 498, 515 (D.C. Cir. 2020) (“[W]hen an owner of
property voluntarily participates in a regulated market, additional regulations that
‘may reduce the value of the property regulated’ do not result in a taking.”
(quoting Bowles, 321 U.S. at 517)).
Moreover, we recently recognized in the context of a physical takings claim
(specifically, a challenge to a New York rent control law) that such a claim cannot
succeed when it is premised on a plaintiff’s voluntary participation in a price-
regulated market. See 74 Pinehurst LLC v. New York, 59 F.4th 557, 563 (2d Cir. 2023)
(“[W]here . . . property owners voluntarily invite third parties to use their
properties, regulations of those properties are ‘readily distinguishable’ from those
that compel invasions of properties closed to the public.”) (quoting Cedar Point
Nursery v. Hassid, 594 U.S. 139, 157 (2021)), cert. denied, 218 L. Ed. 2d 66 (Feb. 20,
2024).

-- 26 of 49 --

27
any other physicians, to provide services to Medicare beneficiaries.”
Id. The statute “simply limit[ed] the amounts” that the
anesthesiologists could “charge those Medicare beneficiaries whom
they [chose] to serve.” Id. The anesthesiologists “retain[ed] the right
to provide medical services to non-Medicare patients free of price
regulations.” Id.
We rejected the anesthesiologists’ argument that other factors,
if not the challenged statute itself, created a legal compulsion to
participate in Medicare.8 For one, under their theory, it was New
York State, a non-party, that “indirectly compel[led] anesthesiologists
to treat Medicare patients and thus submit to price regulations, not
the federal government.” Id. at 917. Moreover, as relevant here, we
concluded that “even if the alleged compulsion to serve Medicare
patients [in hospitals] were imputed to the federal government,” the
anesthesiologists’ takings claim would fail because they could “avoid
treating Medicare beneficiaries by practicing on an outpatient basis.”
Id. Although the anesthesiologists insisted that “limiting themselves
to outpatient practices [was] not an economically viable option,” we
explained that “economic hardship is not equivalent to legal
compulsion for purposes of takings analysis.” Id.
8 We assumed, without deciding, that New York law required hospitals to
treat Medicare patients, but we were not persuaded that the law applied to the
anesthesiologists because the statute “does not on its face apply to individual
physicians.” Id. at 917. We went on to conclude that even if the New York law
required hospital-based anesthesiologists to treat Medicare patients, their
argument failed for the additional reasons discussed here. See id.

-- 27 of 49 --

28
Participation in the Negotiation Program, like participation in
Medicare as a whole, is voluntary. Nothing in the IRA, or in any other
statute, compels pharmaceutical companies to offer products or
services through Medicare, via the Negotiation Program or otherwise.
Boehringer does not argue to the contrary; instead, it advances an
economic hardship argument substantially like the one raised by the
anesthesiologists, and rejected by this Court, in Garelick. Boehringer
contends that the government has employed economic pressure to
compel the company’s participation in the Negotiation Program on
CMS’s preferred terms. The company submits that its only
alternatives to participation, short of divesting its interest in
Jardiance, are to decline to sign the Manufacturer Agreement and
incur a significant excise tax on any future sales of Jardiance to
Medicare beneficiaries, or withdraw all its products from Medicare
and Medicaid.9 Putting aside the excise tax, the fact remains that
Boehringer can simply opt out of Medicare and Medicaid. Boehringer
estimates that if it took that route, it would lose more than half its U.S.
net sales. That possibility, Boehringer argues, would bring economic
“devastat[ion],” not mere economic hardship, “making any ‘choice’
to avoid the Program illusory.” Appellant’s Br. 48, 51. As we
observed in Garelick, however, the choice to participate in a voluntary
government program does not become involuntary simply because
the alternatives to participation appear to entail worse, even
9 The parties dispute whether the possibility of divestment is relevant for
purposes of our Fifth Amendment analysis, but we need not resolve that question
given our conclusion that Boehringer’s participation in the Negotiation Program
is voluntary because no law requires the company to participate in Medicare
generally or in the Negotiation Program specifically.

-- 28 of 49 --

29
substantially worse, economic outcomes. See 987 F.2d at 917; see also
St. Francis Hosp. Ctr., 714 F.2d at 875 (“[T]he fact that practicalities may
in some cases dictate participation [in Medicare] does not make
participation involuntary.”).
The Supreme Court’s analysis in National Federation of
Independent Businesses v. Sebelius (“NFIB”) does not command a
different result. 567 U.S. 519 (2012). There, the Court considered a
provision of the Affordable Care Act that required states to choose
between accepting new Medicaid funding or losing all existing
Medicaid funding. The Court held that the provision violated the
Spending Clause because it amounted to “economic dragooning that
leaves the States with no real option but to acquiesce in the Medicaid
expansion.” Id. at 519.
Boehringer insists that the Negotiation Program is “similarly
coercive.” Appellant’s Br. at 48. But the Supreme Court’s holding in
NFIB very clearly derived from federalism concerns, i.e., the scope of
the federal government’s authority to regulate the states. See NFIB,
567 U.S. at 578 (“Permitting the Federal Government to force the
States to implement a federal program would threaten the political
accountability key to our federal system.”); id. (“Spending Clause
programs do not [threaten political accountability] when a State has a
legitimate choice whether to accept the federal conditions in exchange
for federal funds. . . . But when the State has no choice, the Federal
Government can achieve its objectives without accountability.”) Such
concerns are not present where, as here, the federal government
program at issue sets the terms for how the federal government will

-- 29 of 49 --

30
pay for goods sold by private parties. See Northport Health Servs. of
Arkansas, LLC v. U.S. Dep't of Health & Hum. Servs., 14 F.4th 856, 869
n.5 (8th Cir. 2021) (noting Supreme Court in NFIB used “economic
dragooning” language “to describe the federal government’s limited
constitutional authority under the Spending Cluase to regulate the
states, not a federal agency’s ability to regulate [private parties’] use
of federal funding”) (citation omitted).
Thus, even accepting Boehringer’s argument that the
Negotiation Program presents the company with a choice between
only bad options—opting into a government program with price
controls or bowing out of the program entirely—that choice is
nonetheless voluntary.
B. Direct Constitutional Claims
Having determined that participation in the Negotiation
Program is voluntary, we now consider Boehringer’s direct
constitutional claims in light of that conclusion.
1. Takings Claim
Boehringer argues that the Negotiation Program effects a per se
physical taking of physical doses of its Jardiance product, in violation
of the Takings Clause of the Fifth Amendment.10 The Takings Clause
provides that “private property [shall not] be taken for public use,
10 Boehringer expressly disclaims any argument that the program effects a
regulatory taking. See Appellant’s Br. 21 n.6 (“Boehringer has asserted only a per
se [physical] takings claim.”); see also id. at 19 (noting that “regulatory takings
claims . . . are not at issue here”).

-- 30 of 49 --

31
without just compensation.” U.S. Const. amend. V. “When the
government effects a physical appropriation of private property for
itself or another—whether by law, regulation, or another means—a
per se physical taking has occurred.” 74 Pinehurst LLC, 59 F.4th at 563.
Here, because Boehringer voluntarily chose to participate in the
Negotiation Program, no taking has occurred. See Garelick, 987 F.2d
at 916–17 (“Because they voluntarily choose to provide services in the
price-regulated Part B program, the plaintiff anesthesiologists do not
have a viable takings claim.”).
Boehringer’s arguments that Garelick does not apply are
unavailing. First, the company asserts that because that case involved
a regulatory takings theory, it is “not ‘controlling precedent’ for
Boehringer’s per se [physical] takings claim.” Appellant’s Br. 51
(quoting Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Plan. Agency,
535 U.S. 302, 323 (2002)). It is true that “[i]t is inappropriate to treat
cases involving physical takings as controlling precedents for the
evaluation of a claim that there has been a regulatory taking, and vice
versa.” Horne v. Dep’t of Agric., 576 U.S. 350, 361 (2015) (internal
quotation marks omitted). But we agree with the district court that
“Garelick stands for a broader principle that participation in Medicare
is voluntary and conditions placed on such participation therefore
cannot constitute a taking.” Boehringer Ingelheim Pharms., 2024 WL
3292657, at *14 n.12. Indeed, no part of our analysis in Garelick
regarding the voluntariness of participation in Medicare implicated
the differences between regulatory and physical takings, and
Boehringer points to none. Boehringer also argues that, unlike the

-- 31 of 49 --

32
plaintiffs in Garelick, it is subject to “coercive mechanisms” that give
it no choice but to keep participating in Medicare. Appellant’s Br. 51.
As discussed above, however, this argument is merely a variation of
the economic hardship theory rejected in Garelick. See 987 F.3d at 916.
Boehringer also argues that the Supreme Court’s decision in
Horne undermines the reasoning in Garelick. In Horne, a family of
raisin growers challenged a program by the Department of
Agriculture requiring them to set aside a percentage of their raisin
crop in certain years for the government, without compensation.
576 U.S. at 355-56. The program, which was intended to maintain a
stable raisin market, required raisin growers to “physical[ly]
surrender” the raisins and transfer title to the government, which in
turn would sell, allocate, or otherwise dispose of the reserve raisins
as it deemed appropriate. Id. at 354–55, 364. Raisin growers retained
only an interest in any net proceeds from sales of the raisins by the
government, after deductions for certain expenses. See id. at 355. The
Supreme Court concluded that the program deprived raisin growers
of “the entire ‘bundle’ of property rights in the appropriated raisins
. . . with the exception of the speculative hope that some residual
proceeds may be left when the Government is done with the raisins
and has deducted the expenses of implementing all aspects of the
[program].” Id. at 361–62. The Court rejected the government’s
argument that raisin growers voluntarily chose to participate in the
raisin market, and dismissed its suggestion that raisin growers could
simply “plant different crops, or sell their raisin-variety grapes as
table grapes or for use in juice or wine.” Id. at 365 (internal quotation

-- 32 of 49 --

33
marks omitted). The Court explained that “[s]elling produce in
interstate commerce, although certainly subject to reasonable
government regulation, is . . . not a special governmental benefit that
the Government may hold hostage.” Id. at 366. Boehringer contends
that this analysis governs its takings claim because the Negotiation
Program appropriates its rights “to possess, use and dispose of” its
Jardiance products, and its right to exclude others from possessing
those products, by “giv[ing] every Medicare enrollee a right to take
possession of Jardiance products on terms set by the Government.”
Appellant’s Br. 22 (internal quotation marks omitted) (citing Horne,
576 U.S. at 361–62; Cedar Point Nursery, 594 U.S. at 149–52).
But Horne is materially different from both Garelick and this
case. Whereas the Horne plaintiffs challenged an actual seizure of
their personal property (raisins) without compensation, the Garelick
plaintiffs challenged regulations that merely limited the price they
could charge under Medicare. In other words, while the government
in Horne was directly appropriating the plaintiffs’ property, the
government in Garelick was setting the price that it would pay for
certain services in its commercial capacity.11 It is well established
11 Boehringer argues that the government is not acting as a market
participant but instead as a market regulator that is “exercis[ing] [its] sovereign
powers by ‘employ[ing] . . . coercive mechanism[s] available to no private party.’”
Appellant’s Br. 56 (quoting Am. Trucking Ass’n v. City of Los Angeles, 569 U.S. 641,
651 (2013)). Thus, Boehringer argues, “a market-participant theory cannot excuse
the Program’s constitutional violations.” Id. But in negotiating prices for
pharmaceuticals for Medicare beneficiaries, the government acts as a market
participant, not a regulator. Cf. United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid
Waste Mgmt. Auth., 438 F.3d 150, 158 (2d Cir. 2006) (“It is plain that the Authority

-- 33 of 49 --

34
that, “[l]ike private individuals and businesses, the Government
enjoys the unrestricted power to produce its own supplies, to
determine those with whom it will deal, and to fix the terms and
conditions upon which it will make needed purchases.” Perkins v.
Lukens Steel Co., 310 U.S. 113, 127 (1940); see also Engquist v. Oregon
Dep’t of Agric., 553 U.S. 591, 598 (2008) (recognizing that “there is a
crucial difference, with respect to constitutional analysis, between the
government exercising ‘the power to regulate or license, as
lawmaker,’ and the government acting ‘as proprietor’”) (quoting
participates in the marketplace as any other economic actor would when, after
having employed its regulatory powers to compel delivery of the waste generated
within the Counties to its processing facilities, it contracts with private parties to
deliver its processed wastes to landfill sites that meet its requirements.”), aff’d,
550 U.S. 330 (2007). Like any other private party seeking to leverage its purchasing
power to get a better bargain, the government through the Negotiation Program
forces pharmaceutical manufacturers to decide whether to do business according
to its terms. See Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940) (noting that in
its capacity as a market participant, the government may set the terms under
which it will purchase goods and services). Although the government acts as a
market regulator when it employs tools “that no private actor could wield,” such
as civil fines, that activity is “evaluate[d] separately” from its activity as a market
participant. Id. at 157–58 (internal quotation marks omitted).
Pharmaceutical manufacturers, such as Boehringer, furthermore are not
without leverage in these negotiations. While the government has a strong interest
in using its purchasing power to drive drug costs down, the Negotiation Program
can cover only drugs without generic alternatives, so that the government will be
incentivized to reach a deal with drug manufacturers to avoid leaving Medicare
beneficiaries without viable substitutes. The ramifications of Boehringer’s
withdrawal from Medicare and Medicaid would be significant, and potentially
harmful to the Medicare program, in that it would result in 20 drugs falling out of
those programs and “more than 1.3 million Americans losing insurance coverage
for Jardiance alone.” Chamber of Commerce Amicus Curiae Br. at 15.

-- 34 of 49 --

35
Cafeteria & Restaurant Workers v. McElroy, 367 U.S. 886, 896 (1961)).
Moreover, the raisin growers in Horne faced a choice between
surrendering a portion of their raisin crop to the government without
compensation as a condition of being able to sell raisins to any buyer,
on the one hand, and exiting the raisin market altogether, on the
other; by contrast, the physicians in Garelick could still offer their full
suite of services (or products) to buyers in the private sector even if
they withdrew from Medicare. See Garelick, 987 F.2d at 916 (noting
that the plaintiffs “retain[ed] the right to provide medical services to
non-Medicare patients free of price regulations”). Because the two
cases required different constitutional analyses, see Engquist, 553 U.S.
at 598, Boehringer’s argument that Horne somehow rejected the
reasoning in Garelick is not persuasive.
In summary, the district court properly dismissed Boehringer’s
takings claim on the ground that participation in Medicare, and thus
in the Negotiation Program, is voluntary.
2. Due Process Claim
Boehringer also argues that the Negotiation Program deprives
it of constitutionally protected property interests without procedural
due process, in violation of the Due Process Clause of the Fifth
Amendment. To prevail on a procedural due process claim,
Boehringer must “(1) identify a liberty or property interest, (2) show
that the state has deprived [it] of that interest, and (3) show that the
deprivation was [e]ffected without due process.” Wheatley v. N.Y.
State United Tchrs., 80 F.4th 386, 392 (2d Cir. 2023). The threshold

-- 35 of 49 --

36
“inquiry in every due process challenge is whether the plaintiff has
been deprived of a protected interest” in liberty or property. Am.
Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 59 (1999). Boehringer asserts
that it has protected property interests in: (1) its “physical doses of
Jardiance,” (2) the ability to “decid[e] the price at which [it] will sell
its Jardiance products,” and (3) “its confidential data regarding
Jardiance.” Appellant’s Br. 26–27 (internal quotation marks omitted).
Boehringer’s claim fails because the Negotiation Program does
not deprive it of any protected property interest. Although Garelick
involved a takings claim, our analysis in that context is equally
applicable in the context of a due process claim: A company suffers
no deprivation of its property interests by voluntarily submitting to a
price-regulated government program.12 Indeed, several courts have
12 Boehringer cites the Fifth Circuit’s opinion in National Infusion Center
Association v. Becerra (“NICA”), 116 F.4th 488 (5th Cir. 2024), in support of its due
process argument. In NICA, the Fifth Circuit reversed an order dismissing a
challenge to the IRA for lack of standing and lack of statutory jurisdiction. In
doing so, the court recognized that the plaintiff—a trade association whose
members provide infusion treatments for cancer and chronic diseases—had
standing to challenge the Negotiation Program because it sufficiently alleged that
it had been deprived of an opportunity to protect its concrete interest in “not
seeing its members’ revenue decrease as a result of allegedly unconstitutional
government action.” Id. at 503. But even if the Fifth Circuit correctly decided the
standing question, whether a party bringing a due process claim has a “colorable
claim” to a protected property interest for purposes of standing is a different
question from whether, on consideration of the merits, the party in fact has a
protected property interest. Booker-El v. Superintendent, Ind. State Prison, 668 F.3d
896, 899–901 (7th Cir. 2012) (holding that for purposes of standing the plaintiff had
adequately pleaded an injury-in-fact based on “a substantial risk [of] losing
benefits” to which he was allegedly entitled, and then holding that the plaintiff in

-- 36 of 49 --

37
dismissed due process claims arising under Medicare and Medicaid
on this basis. See, e.g., Baptist Hosp. E. v. Sec'y of Health & Hum. Servs.,
802 F.2d 860, 869–70 (6th Cir. 1986) (rejecting due process claim by
hospitals seeking reimbursement from Medicare because
“participation in the Medicare program is wholly voluntary” and
“any obligations are as freely accepted as the benefits”); Kaiser Found.
Health Plan, Inc. v. Burwell, 147 F. Supp. 3d 897, 911 (N.D. Cal. 2015)
(regulation of Medicare Advantage organization’s expenditure of
Medicare funds did not violate the organization’s procedural due
process rights because “[p]articipation in the Medicare program is a
voluntary undertaking”); Idaho Health Care Ass’n v. Sullivan, 716 F.
Supp. 464, 472 (D. Idaho 1989) (rejecting due process challenge to
Medicaid regulations because the plaintiffs voluntarily participated
in the program and thereby agreed to “accept imposition of
governmental regulation” under the program). Boehringer had the
choice to opt out of the Negotiation Program and withdraw from
Medicare and Medicaid before the deadlines to sign the Manufacturer
Agreement and submit relevant data to CMS, and long before it
would begin selling Jardiance products at the “maximum fair price”
established during its negotiations with CMS. The company instead
chose to participate in the program. That voluntary decision did not
give rise to any protected property interest. Accordingly, the district
court committed no error in dismissing Boehringer’s due process
claim.
fact lacked a protected property interest in those same benefits). In any event, the
Fifth Circuit did not address the fact that participation in the Negotiation Program
is voluntary, which is dispositive of Boehringer’s claim under Garelick.

-- 37 of 49 --

38
3. First Amendment Claim
Additionally, Boehringer argues that the Negotiation Program
violates its First Amendment right to free speech by compelling it to
adopt the government’s views as set forth in the Manufacturer
Agreement. In particular, Boehringer takes issue with the
Manufacturer Agreement’s references to “negotiations” and
“maximum fair price,” and any statement that Boehringer “agree[d]”
(that is, voluntarily) to the program’s terms. Appellant’s Br. 36–38.
The company argues that the Negotiation Program does not involve
“genuine negotiation” because “the ‘severe’ consequences for
manufacturers that do not reach ‘agreement’ effectively ensure that
manufacturers cannot walk away.” Id. at 37 (quoting NICA, 116 F.4th
at 500). The company also “disagrees that the prices set through the
Program are ‘fair,’ much less the ‘maximum fair price[s],’” because
“the IRA requires prices set through the Program to be at least 25-60%
below the market-based rate paid by wholesalers, and CMS must go
as far below that ceiling as possible.” Id. (citing 42 U.S.C.
§ 1320f-3(b)(1), (c)). Further, Boehringer argues that it did not “agree”
to participate in the program, again insisting that it was “coerced into
doing so.” Id. at 38. The company notes that it “signed the
Manufacturer Agreement under protest, and only as a means of
avoiding even larger penalties.” Id.
“[T]he First Amendment protects the right to decide what to
say and what not to say.” Burns v. Martuscello, 890 F.3d 77, 84 (2d Cir.
2018) (internal quotation marks omitted). Any “Government action
that . . . requires the utterance of a particular message favored by the

-- 38 of 49 --

39
Government[] contravenes this essential right.” Turner Broad. Sys.,
Inc. v. FCC, 512 U.S. 622, 641 (1994); see also 303 Creative LLC v. Elenis,
600 U.S. 570, 586 (2023) (“[T]he government may not compel a person
to speak its own preferred messages.”) (citations omitted)).
Corporations and individuals equally enjoy the protection of this
right. See Pac. Gas & Elec. Co. v. Pub. Utils. Comm’n of Cal., 475 U.S. 1,
16 (1986) (plurality op.) (“For corporations as for individuals, the
choice to speak includes within it the choice of what not to say.”);
Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 343 (2010)
(rejecting “the argument that political speech of corporations or other
associations should be treated differently under the First Amendment
simply because such associations are not natural persons” (internal
quotation marks omitted)). A violation of this right occurs only when
“the application of the law at issue actually compels [] expressive
conduct.” Emilee Carpenter, LLC v. James, 107 F.4th 92, 96 (2d Cir. 2024)
(emphasis added); see also C.N. v. Ridgewood Bd. of Educ., 430 F.3d 159,
189 (3d Cir. 2005) (“[A] violation of the First Amendment right against
compelled speech occurs only in the context of actual compulsion.”).
To constitute actual compulsion, “the governmental measure must
punish, or threaten to punish, protected speech by governmental
action that is regulatory, proscriptive, or compulsory in nature.”
Ridgewood Bd. of Educ., 430 F.3d at 189 (internal quotation marks
omitted).
Boehringer argues that it suffered legal compulsion for
purposes of its First Amendment claim because it “could not have
withdrawn from the [Negotiation] Program before the deadlines to

-- 39 of 49 --

40
sign the Manufacturer Agreement and participate in the negotiation
process.” Appellant’s Br. 55 n.25. The company contends that “[t]he
IRA suspends the excise tax only when a manufacturer terminates its
Medicare and Medicaid agreements,” and at the same time delays the
effective date of manufacturer withdrawal by eleven to twenty-three
months. Id. (citing 26 U.S.C. § 5000D(c); 42 U.S.C.
§ 1395w-114a(b)(4)(B)(ii)). Yet CMS has established a process through
which a manufacturer can substantially expedite its withdrawal. Per
CMS guidance, when a manufacturer provides notice that it does not
intend to participate in the Negotiation Program and wishes to
terminate its Medicare and Medicaid agreements, the agency “will
automatically grant such termination requests upon receipt,” and
“will expedite the effective date of the . . . termination” so that
termination occurs thirty days after receipt of the notice. Joint App’x
217.
Boehringer contends that CMS’s expedited termination
guidance conflicts with the text of the IRA and thus did not offer a
legitimate alternative to participating in the Negotiation Program.
But as the district court explained, “[n]othing in the statute prohibits
CMS from commencing the 30-day good cause termination process
upon receiving a notice from the manufacturer; it simply precludes
the manufacturer from opting for the 30-day termination process
unilaterally.” Boehringer, 2024 WL 3292657, at *9. The statute
expressly provides that “[t]he Secretary may provide for termination
of an agreement under [the Medicare Coverage Gap Discount
Program] for a knowing and willful violation of the requirements of

-- 40 of 49 --

41
the agreement or other good cause shown,” 42 U.S.C. § 1395w-
114a(b)(4)(B)(i), and that “[t]he Secretary shall provide for
termination of an agreement” under the Manufacturer Discount
Program for the same reasons, id. § 1395w-114c(b)(4)(B)(i). The term
“good cause” is “a uniquely flexible and capacious concept, meaning
simply a legally sufficient reason.” United States, ex rel. Polansky v.
Exec. Health Res., Inc., 599 U.S. 419, 429 n.2 (2023) (internal quotation
marks omitted). Boehringer does not contest that a manufacturer’s
wish to withdraw from the Negotiation Program before it becomes
subject to any new obligation or penalty constitutes good cause.
Accordingly, Boehringer’s argument that it could not, in fact,
withdraw from the Negotiation Program within the thirty-day period
offered by CMS is not persuasive.
Because Boehringer’s assent to the Manufacturer Agreement
did not occur in the context of actual compulsion, the company
suffered no First Amendment violation. See Corren v. Condos, 898 F.3d
209, 220 (2d Cir. 2018) (rejecting First Amendment freedom of speech
challenge to a campaign public financing program because the
plaintiffs voluntarily chose to participate in the program and
“remain[ed] free to reject the [program’s] funding . . . if they
believe[d] that private financing of their campaigns [would] facilitate
greater speech”); cf. Grove City Coll. v. Bell, 465 U.S. 555, 575–76 (1984)

-- 41 of 49 --

42
(rejecting First Amendment freedom of association claim premised on
participation in voluntary government program).13
C. Unconstitutional Conditions Claims
In the alternative to its argument that the Negotiation Program
directly violates its rights under the First and Fifth Amendments,
Boehringer contends that even if the program were voluntary, the
program indirectly violates the company’s rights by imposing
unconstitutional conditions on its ability to participate in Medicare
and Medicaid.
The unconstitutional conditions doctrine prevents the
government from “burdening the Constitution’s enumerated rights
by coercively withholding benefits from those who exercise them.”
Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 606 (2013).
Put differently, the government may not produce indirectly “a result
which [it] could not command directly,” Speiser v. Randall, 357 U.S.
513, 526 (1958), by requiring a regulated party to give up its
constitutional rights in exchange for a government benefit. This
occurs when, for example, the government places “a condition on
the recipient of the [benefit] rather than on a particular program or
service, thus effectively prohibiting the recipient from engaging in the
13 Having disposed of Boehringer's First Amendment claim on the grounds
explained above, we need not address the government's contention that the
Manufacturer Agreement explicitly excludes any interpretation to the effect that it
expresses views of Boehringer.

-- 42 of 49 --

43
protected conduct outside the scope of the federally funded
program.” Rust v. Sullivan, 500 U.S. 173, 197 (1991).
The Supreme Court has applied this “overarching principle” of
constitutional law in “a variety of contexts.”14 Koontz, 570 U.S. at 604
(collecting cases). The doctrine applies even when a party has no
right to the benefit at issue—that is, even when a party voluntarily
participates in a government program. Indeed, the Supreme Court
recognized in Koontz that “[v]irtually all of [its] unconstitutional
conditions cases involve a gratuitous governmental benefit of some
kind,” and that it has “repeatedly rejected the argument that if the
government need not confer a benefit at all, it can withhold the benefit
because someone refuses to give up constitutional rights.” 570 U.S. at
608; see also O’Connor v. Pierson, 426 F.3d 187, 201 (2d Cir. 2005) (“It is
settled law that the government may not, as a general rule, grant even
a gratuitous benefit on condition that the beneficiary relinquish a
constitutional right.”) (internal quotation marks omitted).
Supreme Court precedent makes clear that laws establishing
conditions on spending under federally funded programs without
implicating recipients’ activity in the private market do not run afoul
of the unconstitutional conditions doctrine. For example, in Regan v.
14 The government contends that Boehringer offers no support for applying
the doctrine when, as here, the government contracts for goods. The cases on
which Boehringer relies, the government submits, involved plaintiffs who, unlike
Boehringer, were either a beneficiary of discretionary benefits or a government
employee or independent contractor. We need not decide whether the doctrine is
so limited, however, because we conclude that the Negotiation Program
withstands scrutiny under the doctrine in any event.

-- 43 of 49 --

44
Taxation With Representation of Washington, the Supreme Court upheld
a regulation prohibiting nonprofit organizations seeking tax-exempt
status under 26 U.S.C. § 501(c)(3) from engaging in lobbying. 461 U.S.
540, 543–44 (1983). “In rejecting the nonprofit’s First Amendment
claim, the Court highlighted . . . the fact that the condition did not
prohibit that organization from lobbying Congress altogether.”
Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc. (“USAID”), 570 U.S.
205, 215 (2013) (discussing Regan). The nonprofit had the option to
divide its operations between “a § 501(c)(3) organization for non-
lobbying activities and a § 501(c)(4) organization for lobbying,” the
Court explained. Regan, 461 U.S. at 544. Put simply, Congress did not
completely prevent the nonprofit from lobbying; it “merely refused
to pay for the lobbying out of public monies.” Id. at 545.
Similarly, in Rust v. Sullivan, the Supreme Court considered a
challenge to HHS regulations implementing Title X of the Public
Health Service Act. 500 U.S. at 177–78. Title X authorizes HHS to
make grants to nonprofit healthcare organizations “to assist in the
establishment and operation of voluntary family planning projects
[to] offer a broad range of acceptable and effective family planning
methods and services.” Id. at 178 (internal quotation marks omitted).
The statute prohibits the funds from being “used in programs where
abortion is a method of family planning.” Id. (internal quotation
marks omitted). The challenged regulations prohibited Title X from
“provid[ing] counseling concerning the use of abortion as a method
of family planning or provid[ing] referral for abortion,” and from
“engaging in activities that encourage, promote or advocate abortion

-- 44 of 49 --

45
as a method of family planning.” Id. at 179–80 (internal quotation
marks omitted). The regulations also “require[d] that Title X projects
be organized so that they are physically and financially separate from
prohibited abortion activities.” Id. at 180 (internal quotation marks
omitted). The Supreme Court rejected the challenge to these
regulations, explaining that the regulations governed only the scope
of a grantee’s Title X projects, leaving it “unfettered in its other
activities.” Id. at 196. Because the regulations did not “prohibit[] the
recipient from engaging in the protected conduct outside the scope of
the federally funded program,” the Court reasoned, the regulations
did not violate the First Amendment. Id. at 197.
In FCC v. League of Women Voters of California, on the other hand,
the Supreme Court invalidated a statutory provision that forbade
noncommercial broadcast television and radio stations to engage in
any editorializing, including with private funds, if the stations
received any federal grants. 468 U.S. 364, 399–401 (1984). The Court
explained that in contrast to the situation faced by the plaintiff
charitable organization in Regan, which remained free to use private
funds without restriction, the broadcasting stations covered by the
blanket ban on editorializing were “barred from using even wholly
private funds to finance [their] editorial activity.” Id. at 400.
As the Supreme Court observed in USAID, “the relevant
distinction that has emerged from [the Court’s unconstitutional
conditions] cases is between conditions that define the limits of the
government spending program—those that specify the activities
Congress wants to subsidize—and conditions that seek to leverage

-- 45 of 49 --

46
funding to regulate speech outside the contours of the program
itself.” 570 U.S. at 214–15. Although this distinction emerged in First
Amendment cases, the same core logic applies with equal force in
other constitutional contexts: Congress has considerable authority to
impose reasonable conditions on parties’ conduct within the four
corners of federally funded programs, but it may not condition
parties’ ability to participate in such programs on compliance with
conditions that burden the parties’ constitutionally protected conduct
beyond those programs.15
The Negotiation Program does not impose unconstitutional
conditions on Boehringer’s rights under the First and Fifth
Amendments. The program simply establishes a price structure to
limit CMS’s costs for certain high-expenditure drugs. Whatever its
merits as a matter of policy, the program is plainly related to the
government’s legitimate goal of controlling Medicare costs.
Moreover, the program applies only to sales of the selected drugs that
occur within the four corners of Medicare; it does not regulate
Boehringer’s sales of Jardiance in the private market. Accordingly,
15 With respect to the unconstitutional conditions analysis of its takings
claim, Boehringer argues that we should apply the nexus-and-proportionality test
set forth in Dolan v. City of Tigard, 512 U.S. 374 (1994), and Nollan v. California Coastal
Commission, 483 U.S. 825 (1987). The Supreme Court has applied that test only in
“the special context of exactions—land-use decisions conditioning approval of
development on the dedication of property to public use,” and has explained that
the test “was not designed to address, and is not readily applicable to, . . . much
different questions arising [in other contexts].” City of Monterey v. Del Monte Dunes
at Monterey, Ltd., 526 U.S. 687, 702–03 (1999). We see no basis for extending the
nexus-and-proportionality test to the wholly different context here. This case has
nothing to do with land use permitting, let alone excessive exactions.

-- 46 of 49 --

47
the program is a lawful exercise of Congress’s spending power under
the statute.
D. APA Claim
Lastly, Boehringer argues that CMS violated the APA by
issuing the Manufacturer Agreement without providing the public
notice and an opportunity to comment. The APA requires “legislative
rule[s]” that “impose legally binding obligations . . . on regulated
parties—and that would be the basis for an enforcement action for
violations of those obligations or requirements”—to undergo a
notice-and-comment process. Nat’l Mining Ass’n v. McCarthy, 758
F.3d 243, 251 (D.C. Cir. 2014); see also White v. Shalala, 7 F.3d 296, 303–
04 (2d Cir. 1993). This requirement also generally applies to
government “contract provisions that are legislative.” Am. Hosp.
Ass’n v. Bowen, 834 F.2d 1037, 1054 (D.C. Cir. 1987). But the APA
provides that a subsequent statute may supersede the APA’s
rulemaking provisions, including the notice-and-comment
requirement, provided that the subsequent statute “does so
expressly.” 5 U.S.C. § 559. Courts have emphasized that exemptions
from the APA’s rulemaking requirements “are not lightly to be
presumed in view of the statement in [the APA] that modifications
must be express.” Asiana Airlines v. Fed. Aviation Admin., 134 F.3d 393,
397 (D.C. Cir. 1998) (quoting Marcello v. Bonds, 349 U.S. 302, 310
(1955)). An exemption is express when Congress “has established
procedures so clearly different from those required by the APA that
it must have intended to displace the norm.” Id.

-- 47 of 49 --

48
The IRA expressly exempts CMS from the APA’s rulemaking
requirements, including the notice-and-comment requirement, with
respect to the Negotiation Program, including the Manufacturer
Agreement, through 2028. Specifically, the IRA states that CMS “shall
implement this section . . . for 2026, 2027, and 2028 by program
instruction or other forms of program guidance.” IRA § 11001(c),
136 Stat. at 1854. This section and others that authorize the use of
guidance stand in contrast to the provisions that expressly require the
promulgation of rules, which strongly indicates that Congress
displaced the APA’s requirements for certain provisions of the IRA.
Compare id. § 11003, 136 Stat. at 1864 (stating that “[t]he Secretary shall
prescribe such regulations and other guidance as may be necessary to
carry out this section,” which establishes the excise tax), with id.
§ 11201, 136 Stat. at 1892 (providing for the implementation of a
subsidy program “for 2024, 2025, and 2026 by program instruction or
other forms of program guidance”). Moreover, the fact that Section
11001 authorizes the use of guidance only for the program’s first three
pricing periods underscores that Congress made a deliberate decision
to authorize an exemption (albeit temporary) from the APA’s
requirements. And although Boehringer argues that, in any event,
Section 11001 does not encompass the Manufacturer Agreement, that
argument is unpersuasive because Section 11001 sets forth the
provisions governing CMS’s implementation of the agreement. See
id. § 11001(c), 136 Stat. at 1841–42 (codified at 42 U.S.C. § 1320f-2).

-- 48 of 49 --

49
III. Conclusion
In summary, we hold:
1. Participation in the Negotiation Program is voluntary
because there is no legal compulsion to offer products or services
through the program.
2. Because participation in the Negotiation Program is
voluntary, the program neither effects an unlawful taking or
deprivation of property interests under the Fifth Amendment nor
compels speech in violation of the First Amendment.
3. The Negotiation Program does not violate the
unconstitutional conditions doctrine because the program is designed
to promote the legitimate government purpose of controlling
Medicare spending and does not regulate conduct outside the scope
of Medicare and Medicaid.
4. CMS’s issuance of the Manufacturer Agreement fell
within the IRA’s exemption from the APA’s notice-and-comment
requirement.
For the foregoing reasons, we AFFIRM the district court’s
judgment.

-- 49 of 49 --