Keeping pace with the ever-changing life sciences industry, Morrison Foerster stays on top of the trends and political, legal, and economic drivers to support striking the balance between innovative discovery and purposeful business planning to assure our clients continued success. MoFo Life Sciences shares timely legal and business insights and in-depth analyses on trends and the complex technologies at the heart of the global pharmaceutical, biotechnology, diagnostics, medical devices, digital health, and AgTech fields.Learn more about our <a href="https://www.mofo.com/capabilities/life-sciences-healthcare" target="_self">Life Sciences practice</a>.<h2 dir="ltr">ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants. She represents clients ranging from large international pharmaceutical companies to midsized companies, startups, and universities.Meghan has filed numerous Patent Term Extension applications to secure additional term for her clients’ patents, which cover FDA-approved products. In addition, Meghan has extensive experience addressing complex obviousness-double patenting and subject matter eligibility issues impacting her clients’ patent portfolios. Meghan also represents clients in both investor-side and target-side due diligence, in deals from seed funding to initial public offerings.Prior to law school, Meghan attended graduate school at the University of California, Los Angeles, where she received a Ph.D. in biological chemistry based on her work on protein-protein and protein-DNA interactions at a molecular level. Meghan is the author of several scientific publications and has presented her research at international conferences.Meghan received her J.D. from the University of Southern California Law School and spent a year as a visiting student at Santa Clara University, where she focused on intellectual property.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants.

Meghan Poon

Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in life sciences, digital, and high-tech industries.His subjects of focus include research and development collaborations, complex licensing agreements, and other technology transactions, as well as know-how protection strategies, and employee invention law. He also has substantial experience in litigating patents, trademarks, and other intellectual property assets, often in a multijurisdictional context. In addition, Wolfgang and his team frequently clear trademarks and ad campaigns and prosecute trademark applications.Wolfgang is co-editor of our <a href="https://lifesciences.mofo.com/" dir="ltr" target="_blank">MoFo Life Sciences Blog</a>.Wolfgang is a partner of Morrison Foerster based in our German office in Berlin.<h4 dir="ltr">Representative Transactional Matters</h4><ul dir="ltr"><li>U.S.-based BioTech fund on various research collaborations and other transactions with German start-ups or research institutions.</li><li>Negotiate multimillion-euro strategic partnership between two AgTech leaders concerning the development and commercialization of pest-resistant transgenic traits.</li><li>Craft global multi-million collaboration regarding AI-powered robotic MaaS.</li><li>UK-based digital health company on product roll-out of RPM applications in Germany; coordinate international expansion.</li><li>Advise numerous German start-ups on their U.S. expansion.</li><li>Draft diverse global patent and know-how license agreements in the areas of AgTech and life sciences—including gene licensing and licensing of genome editing technologies (e.g., CRISPR)—and medical devices; draft correlating supply and distribution agreements.</li><li>Structure IP rights in connection with joint ventures and other M&A transactions, including the carve-out of a patent-heavy semiconductor business comprising nine jurisdictions into a German–U.S. joint venture.</li><li dir="ltr">Advise on government-funded, multi-partner R&D projects and/or R&D projects with academic institutions, as well as on employee invention law.</li></ul><h4 dir="ltr">Representative Contentious IP Matters</h4><ul dir="ltr"><li>Lead counsel in an international dispute between software companies on rights and obligations following termination of a multi-million licensing and distribution arrangement; coordinate local counsel.</li><li>Defend Japanese chip manufacturer in high-profile SEP-litigation; advise on global settlement arrangement.</li><li>Represent leading internet retailer in patent infringement and concurrent invalidity proceedings in the context of a multijurisdictional dispute concerning touch-screen technology.</li><li>Represent diverse pharmaceutical and life sciences companies in national and cross-border patent infringement proceedings and other technology-related disputes, including preliminary injunctions as well as pre‑trial discovery and inspection proceedings, concerning, inter alia, drug-coating technologies, toner cartridges, medicinal gases, transgenic plants, and vaccines.</li><li dir="ltr">Conduct trademark, copyright, and false advertising litigation, including, most notably, a high-profile trademark litigation for a German bank, and a nine-country cross-border trademark litigation involving a famous pharmaceutical brand.</li></ul>

Dr. Wolfgang Schönig berät Mandanten zum Schutz des geistigen Eigentums sowohl in streitigen als auch nichtstreitigen Angelegenheiten, mit einem besonderen Fokus auf die IP-rechtliche Beratung von Unternehmen aus den Bereichen Life Sciences, Digitalwirtschaft und High-Tech.Zu seinen Beratungsschwerpunkten gehören Forschungs- und Entwicklungskooperationen, komplexe Lizenzvertragsgestaltungen und andereTechnologie-Transaktionen, sowie Know-how-Schutz-Strategien und das Arbeitnehmererfinderrecht. Er verfügt zudem über umfangreiche Prozesserfahrung zur Durchsetzung von Patenten, Marken- und anderen IP-Rechten, häufig auch in einem grenzüberschreitenden Kontext. Darüber hinaus bewertet Dr. Wolfgang Schönig zusammen mit seinem Team regelmäßig die Rechtskonformität von Werbekampagnen, prüft die Verfügbarkeit von Marken und entwickelt entsprechende Anmeldestrategien.Dr. Wolfgang Schönig ist Co-Editor des Life Sciences Blogs von Morrison Foerster.Er hat seinen Doktortitel an der Heinrich-Heine-Universität Düsseldorf und seinen LL.M. an der Fordham School of Law in New York erworben, jeweils mit Schwerpunkt im gewerblichen Rechtsschutz. Seinen MBA-Abschluss erhielt er von der European University in Barcelona.Dr. Wolfgang Schönig ist Partner des deutschen Büros von Morrison Foerster in Berlin.<h4 dir="ltr">Repräsentative Transaktionen</h4><ul><li dir="ltr">BioTech-Fonds mit Sitz in den USA bei verschiedenen Forschungskooperationen und anderen Transaktionen mit deutschen Start-ups oder Forschungseinrichtungen</li><li dir="ltr">Verhandlung einer hochvolumigen strategischen Partnerschaft zwischen zwei Technologieführern im Bereich Crop Science betreffend der Entwicklung und Kommerzialisierung von bestimmten Resistenzen</li><li dir="ltr">Gestaltung einer globalen Multi-Millionen-Zusammenarbeit für KI-gestützte Roboter</li><li dir="ltr">Ein in Großbritannien ansässiges Unternehmen für digitale Gesundheit bei der Markteinführung von RPM-Anwendungen in Deutschland; Koordination der internationalen Expansion</li><li dir="ltr">Beratung zahlreicher deutscher Start-ups bei deren US-Expansion</li><li dir="ltr">Strukturierung und Verhandlung diverser Patent- und Know-How-Lizenzen in den Bereichen Ag Tech und Life Sciences – einschließlich Fragen zu genome editing wie CRISPR-Medizingeräte, sowie Gestaltung von Softwarelizenzverträgen und Erstellung korrespondierender Liefer- und Vertriebsvereinbarungen</li><li dir="ltr">Strukturierung von IP-Rechten im Zusammenhang mit Joint Ventures und anderen M&A-Transaktionen, darunter die Koordination eines neun Länder umfassenden IP Carve-Outs im Rahmen eines Halbleiter-JVs</li><li dir="ltr">Beratung zu staatlich geförderten Multi-Partner F&E-Projekten und/oder F&E-Projekten mit akademischen Einrichtungen sowie zum Arbeitnehmererfindungsrecht</li></ul><h4 dir="ltr">Repräsentative IP-Streitigkeiten</h4><ul><li dir="ltr">Lead Counsel in einem internationalen Rechtsstreit zwischen Softwareunternehmen über Rechte und Pflichten nach Beendigung einer millionenschweren Lizenz- und Vertriebsvereinbarung; Koordinierung der lokalen Anwälte</li><li dir="ltr">Verteidigung eines japanischen Chipherstellers in einem prominenten Streitfall bezüglich Standardessentieller Patente (SEP); Beratung zu einer globalen Vergleichsregelung</li><li dir="ltr">Verteidigung einer führenden Internetplattform gegen Ansprüche eines Patenttrolls wegen vermeintlicher Verletzung von Patent bezüglich Touchscreen-Technologie sowie korrespondierende US-Streitigkeiten</li><li dir="ltr">Vertretung von Pharma- und Life Science-Unternehmen in nationalen und grenzüberschreitenden Patentverletzungsverfahren und anderen technologiebezogenen Streitigkeiten, einschließlich einstweiliger Verfügungsverfahren und vorprozessualer Beweissicherungs- und Besichtigungsverfahren, unter anderem in Bezug auf Arzneimittelbeschichtungstechnologien, Tonerkartuschen, medizinische Gase, transgene Pflanzen und Impfstoffe</li></ul>

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Wolfgang Schönig is a partner of Morrison Foerster (International) LLP based in our German office in Berlin. His practice specialty is advising on IP aspects relative to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. Wolfgang is specialized in research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig focuses his practice on IP aspects relative to transactions in the digital, telecoms, high tech, life sciences, and pharmaceuticals industry, as well as legal representation in IP disputes.

Wolfgang Schönig advises clients on IP aspects relating to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. His additional focus areas include research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig

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Because No One is Immune to the Law

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In recent months, six different lawsuits have been filed challenging the Inflation Reduction Act (IRA)’s Drug Price Negotiation Program (the “Program”), with a flurry of activity likely in the coming months before the Program’s first deadlines. Below we analyze the latest developments in the cases and compare the lawsuits.

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Legal Battles Continue Over Inflation Reduction Act’s Drug Price Negotiation Measures | MoFo Life Sciences

Joseph R. Palmore

In recent months, six different lawsuits have been filed challenging the Inflation Reduction Act (IRA)’s Drug Price Negotiation Program (the “Program”), with a flurry of activity likely in the coming months before the Program’s first deadlines. Below we analyze the latest developments in the cases and compare the lawsuits.The ProgramAs we previously <a href="https://lifesciences.mofo.com/topics/cms-reveals-new-details-on-medicare-drug-price-negotiation-program#_ftn2">covered</a>, the drug price negotiation requirements were enacted as part of the IRA, which authorizes the Centers for Medicare and Medicaid Services (CMS) to engage in price negotiations with drug manufacturers for certain high-cost, single-source Medicare Part B or Part D drugs. CMS will select the 10 and 15 highest-ranked Part D drugs for rolling out negotiated prices in 2026 and 2027, respectively. To ensure compliance with the negotiation process, the IRA applies an excise tax on each sale of the drug during a period of non-compliance, including drugs sold to purchasers other than Medicare and Medicaid.Some of the Program’s first, major deadlines are fast approaching. CMS recently <a href="https://www.cms.gov/newsroom/press-releases/cms-releases-revised-guidance-historic-medicare-drug-price-negotiation-program" target="_blank">confirmed</a> that by September 1, 2023, the agency will publish a list of 10 Medicare Part D drugs for negotiation. By October 1, 2023, manufacturers of the selected drugs must sign an agreement with CMS to conduct negotiations.The LawsuitsCurrently, six complaints have been filed against the U.S. Department of Health and Human Services (HHS), which oversees CMS. The primary plaintiff and location of each suit are listed below:<ol><li>Merck & Co., Inc. (Merck): Filed June 6, 2023, in Washington, D.C.<a href="https://www.courtlistener.com/docket/67478203/1/merck-co-inc-v-becerra/" target="_blank"> Merck v. Becerra et al., D.D.C., No. 1:23-cv-01615</a></li><li>U.S. Chamber of Commerce (Chamber): Filed June 9, 2023, in Columbus, OH<a href="https://www.uschamber.com/assets/documents/Complaint-Dayton-Area-Chamber-of-Commerce-v.-Becerra-S.D.-Ohio.pdf" target="_blank"> Dayton Area Chamber of Com. et al. v. Becerra et al., S.D. Ohio, No. 3:23-cv-00156</a></li><li>Bristol Myers Squibb (Bristol): Filed June 16, 2023, in Trenton, NJ<a href="https://www.courtlistener.com/docket/67508656/1/bristol-myers-squibb-company-v-becerra/" target="_blank"> Bristol Myers Squibb Co. v. Becerra et al., D.N.J., No. 3:23-cv-03335</a></li><li>Pharma. Research and Manufacturers of America (PhRMA): Filed June 21, 2023, in Austin, TX<a href="https://www.courtlistener.com/docket/67515442/1/1/national-infusion-center-association-v-xavier-becerra/" target="_blank"> Nat’l Infusion Ctr. Ass’n v. Becerra et al., W.D. Tex., No: 23-cv-00707</a></li><li>Astellas Pharma (Astellas): Filed July 14, 2023, in Chicago, IL<a href="https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/07/Astellas_20230714_COMPLAINT.pdf" target="_blank"> Astellas Pharma US, Inc., v. Dep’t of Health and Hum. Services et al., N.D. Ill., No: 23-cv-04578</a></li><li>Johnson & Johnson (J&J): Filed July 18, 2023, in Trenton, NJ Janssen Pharmaceuticals, Inc. v. Becerra et al., D.N.J., No: 23-cv-03818</li></ol>Factual AllegationsTwo factual allegations are most common among the plaintiffs: 1) that drug price negotiation will not provide a genuine opportunity to negotiate, and 2) that the excise taxes operate as a coercive penalty.The Chamber complaint argues that there is no genuine opportunity to negotiate by pointing out that there is no judicial or administrative review of prices, government offers are capped via statute and have no minimum, and materials used in the negotiation are limited. The Chamber complaint also preempts the government’s likely counter, that manufacturers could voluntarily withdraw from Medicare and Medicaid to avoid the Program altogether. The Chamber points out that Medicare and Medicaid programs dominate the market, respectively accounting for 21% and 17% of <a href="https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet#:~:text=Historical%20NHE,%202021:&amp;text=Medicare%20spending%20grew%208.4%25%20to,28%20percent%20of%20total%20NHE." target="_blank">national health spending</a>. Therefore, manufacturers cannot afford to withdraw drugs from those programs to avoid the price setting.The Merck complaint provides an example supporting the argument that enormous excise taxes constitute a penalty. Merck states that excise taxes escalate daily from 186% to 1900% of a drug’s daily revenues, and estimates that refusal to negotiate for even just the one drug cited in their complaint would incur tens of millions of dollars in penalties on the first day. The penalties would purportedly escalate to hundreds of millions of dollars per day thereafter.Legal ArgumentsThe legal arguments detailing why the Program is unconstitutional are varied, but overlap across complaints. The most common argument is that the Program violates the First Amendment by forcing companies to state that they “agree voluntarily” to the government’s offer. Across all the complaints, seven legal arguments in total challenge the constitutionality of the Program. A summary of each argument and the associated litigants are below.<ol><li>Fifth Amendment – Unlawful Taking: Under the Program, the government is taking products and giving them to third parties through arbitrary, forced sales. Plaintiffs: Merck, Bristol, Astellas, and J&J</li><li>Fifth Amendment – Due Process: There is no procedural or legal recourse under the Program, prices are prejudiced against manufacturers, and negotiations are concealed from the public. Thus, there is significant risk of “erroneous depravation” under Supreme Court legal standards. Plaintiffs: Chamber, PhRMA, and Astellas</li><li>First Amendment – Compelled Speech: The Program forces companies to publicly state that they voluntarily “agree” to a price, when it is actually a forced negotiation. Plaintiffs: Merck, Chamber, Bristol, Astellas, and J&J</li><li>Eighth Amendment – Excessive Fines: The “excise taxes” imposed by the Program are not taxes intended to discourage the use of a product, but rather are penalties intended to punish manufacturers for refusing to agree to negotiate or agree to the maximum fair price. Plaintiffs: Chamber and PhRMA</li><li>Const. Article 1 – Separation of Powers: The Program violates constitutional nondelegation principles through Congress’s impermissible delegation of broad, unconstrained authority to HHS to set prices without any meaningful constraints. Plaintiffs: Chamber and PhRMA</li><li>Const. Article 1 – Enumerated Powers: Congress does not have the power to authorize the Program’s excise tax because it operates as a penalty. Plaintiffs: Chamber</li><li>First and Fifth Amendment – Unconstitutional Condition: The government cannot condition participation in Medicare and Medicaid upon compliance with the Program and subsequent relinquishment of its constitutional speech and property rights. Litigant: J&J</li></ol>Recent MotionsOn July 11, 2023, Merck filed a <a href="https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/06/Merck_20230711_MOTION-for-Summary-Judgment.pdf" target="_blank">motion for summary judgment</a> seeking declaratory and injunctive relief, reasserting allegations that the Program “is tantamount to extortion” and further expounding arguments that the Program violates the Fifth Amendment as an illegal taking and the First Amendment as compelled speech. The motion also more fully develops a response to the government’s argument that participating in Medicare and Medicaid is voluntary. Specifically, it argues that the Program is not analogous to receipt of federal funds with “conditions,” especially since a manufacturer cannot realistically terminate participation in Medicare or Medicaid in time to avoid potential excise taxes. Merck points out that it would have needed to give CMS notice by January 31, 2022, in order to properly extricate its products before the upcoming October 1, 2023, deadline.On July 12, 2023, the Chamber filed a <a href="https://aboutblaw.com/9f5" target="_blank">motion for a preliminary injunction</a>, asking the court to enjoin HHS from implementing the Program. The Chamber’s motion focuses on the Due Process argument, stating that when the government sets prices, it must afford parties procedural safeguards to ensure just and reasonable prices and a fair return on investment, as directly addressed by Sixth Circuit precedent. The Chamber finally asserts that manufacturers will be irreparably harmed by costs associated with compliance and disclosure, separate from the even greater costs associated with government-mandated prices.Key Takeaways<ul><li>Litigation challenging the Program will likely grow more active as CMS deadlines approach in the Fall, with resultant court decisions potentially impacting the pharmaceutical and healthcare industry more broadly.</li><li>The courts’ decisions will inform the legal strategy of other litigants seeking to challenge the Program, and likely indicate which arguments present the most viable challenge.</li><li>Unless a court is willing to take action before October, the first phase of the Program will go into effect, and affected manufacturers will need to collect necessary data for submission to CMS.</li><li>With lawsuits filed in five district courts in five circuits, plaintiffs are clearly trying to diversify their chances for an injunction. It remains to be seen whether this strategy will increase the likelihood that the Supreme Court will take the case and whether the Supreme Court would decide in favor of the pharmaceutical industry.</li></ul>The Morrison Foerster team will continue to monitor this litigation for developments and is actively advising clients on how it may impact their business.

Legal Battles Continue Over Inflation Reduction Act’s Drug Price Negotiation Measures

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