Summary
The Eighth Circuit affirmed a district court's grant of a preliminary injunction against Minnesota's prescription drug price regulation statute. The court held that the state law likely violates the dormant Commerce Clause because it has the impermissible extraterritorial effect of controlling out-of-state drug transaction prices. The panel found that the plaintiff trade association was likely to succeed on the merits and that the balance of harms favored maintaining the injunction.
Topics
Practice areas
Questions Presented
- Whether Minnesota Stat. §62J.842 violates the dormant Commerce Clause by having an impermissible extraterritorial effect on out‑of‑state manufacturers' prices
- Whether the district court abused its discretion in granting the preliminary injunction
Holdings
- The Act violates the dormant Commerce Clause because it controls the price of out‑of‑state transactions, an impermissible extraterritorial effect; therefore the district court’s preliminary injunction is affirmed.
- The district court did not abuse its discretion; the preliminary injunction is affirmed.
Key quotations
“Because our decision is predominantly one of determining whether the established facts fall within the relevant legal definition, albeit a constitutional definition, we apply a de novo standard of review in deciding whether there has been a violation of the commerce clause.” (at 957)
“The Court did not overturn “the rule that was applied in Baldwin and Healy,” preserving its precedent that a state violates the extraterritoriality principle when it enacts “price control or price affirmation statutes that tie[] the price of in-state products to out-of-state-prices.”” (at 957)
Factual background
AAM is a trade organization of generic prescription‑drug manufacturers. Minnesota enacted Stat. §62J.842, prohibiting manufacturers from imposing excessive price increases on generic or off‑patent drugs sold in the state. None of AAM's member manufacturers are Minnesota entities, but the law would penalize out‑of‑state manufacturers whose drugs are sold into Minnesota, potentially controlling prices outside the state.
Procedural history
The district court granted AAM's motion for a preliminary injunction, finding the Minnesota Act likely violated the dormant Commerce Clause. AAM appealed the injunction.