The federal appeals court’s dismissal of Amgen’s challenge in June has closed the procedural chapter of a case that once threatened to derail Colorado’s drug pricing regime — and opened the door to the first real merits test of the state’s authority to cap prescription drug prices.
The dismissal by the U.S. Court of Appeals for the Federal Circuit effectively ended the standing dispute over whether Amgen could challenge Colorado’s prescription drug pricing framework before suffering a concrete injury. The underlying constitutional questions, however, remain unresolved.
The next phase of litigation will test whether Colorado can enforce the nation’s first Upper Payment Limit on a prescription drug through its Prescription Drug Affordability Board.
“This was not a merits decision,” said Christopher Pinto, a partner in Akerman’s healthcare practice. “It reflects an agreement to dismiss rather than a ruling on the underlying legal claims.”
A Procedural Case Gives Way to a Substantive One
The June dismissal came by joint stipulation. As such, “the dismissal leaves the constitutional issues live for additional litigation,” Pinto said.
The earlier phase of litigation centered on standing, the constitutional requirement that plaintiffs demonstrate a concrete, particularized injury before a federal court may hear their claims.
“Courts often find manufacturers lack standing where a law targets payors or consumers rather than imposing direct obligations on the manufacturer,” Pinto said.
That doctrinal barrier has meant that pre-enforcement challenges to affordability boards tend to fail unless and until a regulation is applied.
Since Colorado has moved beyond policy design into implementation, including setting an Upper Payment Limit on a prescription drug, a more concrete regulatory impact is in view. “Manufacturers would have more success in as-applied challenges after the board issues a definitive determination,” he said.
Litigation is expected to shift from procedural challenges into substantive constitutional disputes that can produce binding precedent.
Constitutional Questions
When courts do reach the merits, they will confront a series of unsettled constitutional arguments.
Amgen has argued that Colorado’s law is preempted by federal patent law and violates the Dormant Commerce Clause, among other claims. However, “courts have been cautious about displacing state regulations that govern price or reimbursement unless there is a direct conflict,” Pinto said.
At the same time, state pricing frameworks could face heightened scrutiny if they are found to burden interstate commerce or regulate conduct beyond Colorado’s borders.
Colorado as a National Test Case
Colorado’s affordability board is the first in the country to impose an Upper Payment Limit on a prescription drug, making it a test case for national drug pricing litigation even as “drug prices remain a hot topic,” Pinto said.
If additional states adopt similar payment limits, Pinto expects a broader wave of disputes spanning constitutional, statutory and commercial law.
For now, “stakeholders should focus on demonstrating clear, concrete harm tied to specific board actions,” Pinto said. “That’s where you’ll see cases survive — and where courts will finally reach the merits.”