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Crystals and Mud in International Taxation: Why the Principal Purpose Test’s Impact Will Not Meet Expectations

This Note takes a fresh look at the Principal Purpose Test (“PPT”), which has been added to over 2,300 bilateral tax treaties since 2015 in an effort to fight tax avoidance. Under the PPT, countries may deny treaty benefits—such as lower tax rates on cross-border income—if it is reasonable for them to conclude that a taxpayer arranged a transaction principally to obtain those benefits.

Critics are skeptical of this rule. They argue that it is too vague and that it confers too much power on tax authorities. But this Note argues that those concerns may be overstated for two primary reasons. First, legal history shows that flexible standards like the PPT tend to become clearer over time, as courts and tax administrations develop more consistent—and more rule-like—interpretations. Second, although some countries might deploy the PPT aggressively, others can interpret it narrowly in an effort to continue attracting multinational businesses.

Whatever the PPT’s ultimate effect, the test will not dramatically reshape international taxation schemes. The PPT’s practical impact will not just be about the text of the test—it will be determined by how different countries choose to enforce it.

Introduction

The early 2010s represent perhaps the only time period in which international tax policy regularly filled the pages of the world’s largest newspapers.1 1.See, e.g., Jia Lynn Yang, Post Analysis of Dow 30 Firms Shows Declining Tax Burden as a Share of Profits, Wash. Post (Mar. 26, 2013), https://www.washingtonpost.com/business/eco‌nomy/post-analysis-of-dow-30-firms-shows-declining-tax-burden-as-a-share-of-profits/2013‌/03/26/3dfe5132-7b9a-11e2-82e8-61a46c2cde3d_story.html.Show More With the global economy still reeling from the 2008 financial crisis, national governments in the United States and Europe publicly questioned the tax bills paid by the world’s largest companies.2 2.For a comprehensive discussion of these investigations and the ensuing public response, see Ruth Mason, The Transformation of International Tax, 114 Am. J. Int’l L. 353, 364–65 (2020). Show More The results of these investigations created a push for international tax changes by entities like the Organisation for Economic Co-operation and Development (“OECD”) and the Group of Twenty (“G20”).3 3.See Yariv Brauner, What the BEPS?, 16 Fla. Tax Rev. 55, 56–57, 60 (2014) [hereinafter Brauner, What the BEPS?].Show More

This Note discusses one component of these changes—a provision called the Principal Purpose Test (“PPT”). The PPT purports to target the abuse of tax treaties by allowing tax administrations to deny treaty benefits to a taxpayer if it is reasonable to conclude the taxpayer entered into a transaction principally to obtain those benefits.4 4.See OECD, Model Tax Convention on Income and on Capital art. 29(9) cmt. ¶¶ 176–177 (2017) [hereinafter OECD, 2017 Model], https://www.oecd.org/content/dam/oecd/en/publicat‌ions/reports/2019/04/model-tax-convention-on-income-and-on-capital-2017-full-version_g1‌g972ee/g2g972ee-en.pdf [https://perma.cc/S82G-DH5A].Show More Commentators have described the power of the PPT in the hands of tax administrations in dramatic language, referencing the atomic bomb,5 5.Lee A. Sheppard, The PPT Through the Lens of the India-Mauritius Protocol, 114 Tax Notes Int’l 1147, 1149 (2024); see, e.g., Eran Levy, Is the Principal Purpose Test an “Atomic Bomb” and Should It Be Used Against Treaty Abuse?, Mich. J. Int’l L. Blog (Dec. 2017), http‌s://www.mjilonline.org/eranlevy/ [https://perma.cc/HN4N-5S6N].Show More the COVID-19 pandemic,6 6.See Sheppard, supra note 5, at 1149.Show More and Sauron’s Ring of Power.7 7.See Craig Elliffe, The Meaning of the Principal Purpose Test: One Ring to Bind Them All?, 11 World Tax J. 47 (2019).Show More To those commentators, the PPT promises to fundamentally alter the world of tax treaties for the worse. Their perspective is based upon the PPT’s language, which can be read as broader than most similarly constructed anti-abuse rules;8 8.For example, the United States’ “business purpose” doctrine identifies and disallows transactions where a taxpayer was “motivated by no business purpose other than obtaining tax benefits.” Mixed tax and business purposes are permissible. Austin v. Comm’r, 113 T.C.M. (CCH) 69, 2017 WL 1437879, at *10–11 (Apr. 24, 2017) (first citing Gregory v. Helvering, 293 U.S. 465 (1935); and then citing Rice’s Toyota World, Inc. v. Comm’r, 752 F.2d 89, 91–92 (4th Cir. 1985)).Show More its authors—a large collection of countries—having specifically encouraged a sweeping interpretation;9 9.See OECD, 2017 Model, supra note 4.Show More and its status as a cornerstone of a global tax initiative aimed at transforming international tax.10 10.See Mason, supra note 2, at 364–65 (arguing that the G20/OECD’s project changed international tax’s participants, agenda, institutions, norms, and legal forms).Show More However, a contextualized approach to predicting the PPT’s effects suggests that commentators have overstated the test’s ultimate impact. This Note situates the PPT within the larger framework of tax competition and looks to the literature on legal form to paint what may be a more realistic picture of the provision’s ultimate impact.

This Note proceeds in five parts. Part I provides background on international tax policy, highlighting recent G20/OECD initiatives to change key elements of the international tax system. Part II introduces the PPT, its intended role in curbing treaty abuse, and the praise and criticism it has received. Part III argues that critics’ concerns about legal uncertainties created by the PPT are overstated in terms of the rule’s ultimate impact. The literature on legal form recognizes that standards become more rule-like as part of an everlasting oscillation between the two forms, and there is no reason to believe the PPT—currently a standard—is any different. Therefore, a focus on the PPT’s initial stage may obscure a future time when the provision will be more certain and targeted in scope. Part IV considers the potential moderating impact of tax competition on the interpretation of the PPT. The literature on legal form allows us to understand that the PPT’s open-ended design delegates discretion over its interpretation from the OECD to individual states, some of which wish to encourage defined and manageable corporate tax standards.11 11.See infra Part IV.Show More Thus, while the PPT’s language might raise overbreadth concerns on first reading, an analysis sensitive to international taxation’s competitive structure may indicate a more nuanced story to come. The Conclusion drives home this Note’s central thesis: viewed in proper context, the PPT may ultimately not be the “atomic bomb” of international tax.12 12.See Sheppard, supra note 5, at 1148–49; Levy, supra note 5.Show More

  1.  See, e.g., Jia Lynn Yang, Post Analysis of Dow 30 Firms Shows Declining Tax Burden as a Share of Profits, Wash. Post

    (Mar

    . 26, 2013),

    https://www.washingtonpost.com/business/eco‌nomy/post-analysis-of-dow-30-firms-shows-declining-tax-burden-as-a-share-of-profits/2013‌/03/26/3dfe5132-7b9a-11e2-82e8-61a46c2cde3d_story.html. ↑

  2. F

    or a comprehensive discussion of these investigations and the ensuing public response, see Ruth Mason, The Transformation of International Tax,

    114

    Am. J. Int’l L.

    353, 364–65 (2020).

    ↑

  3.  See Yariv Brauner, What the BEPS?, 16 Fla. Tax Rev.
    55, 56–57, 60 (2014

    ) [hereinafter Brauner, What the BEPS?]. ↑

  4.  See OECD, Model Tax Convention on Income and on Capital art. 29(9) cmt. ¶¶ 176–177 (2017) [hereinafter OECD, 2017 Model], https://www.oecd.org/content/dam/oecd/en/publicat‌ions/reports/2019/04/model-tax-convention-on-income-and-on-capital-2017-full-version_g1‌g972ee/g2g972ee-en.pdf [https://perma.cc/S82G-DH5A]. ↑
  5.  Lee A. Sheppard, The PPT Through the Lens of the India-Mauritius Protocol, 114 Tax Notes Int’l
    1147, 1149 (2024);

    see, e.g., Eran Levy, Is the Principal Purpose Test an “Atomic Bomb” and Should It Be Used Against Treaty Abuse?, Mich. J. Int’l L. Blog (Dec.

    2017

    ), http‌s://www.mjilonline.org/eranlevy/ [https://perma.cc/HN4N-5S6N]. ↑

  6.  See Sheppard, supra note 5, at 1149. ↑
  7.  See Craig Elliffe, The Meaning of the Principal Purpose Test: One Ring to Bind Them All?, 11 World Tax J. 47 (2019). ↑
  8.  For example, the United States’ “business purpose” doctrine identifies and disallows transactions where a taxpayer was “motivated by no business purpose other than obtaining tax benefits.” Mixed tax and business purposes are permissible. Austin v. Comm’r, 113 T.C.M. (CCH) 69, 2017 WL 1437879, at *10–11 (Apr. 24, 2017) (first citing Gregory v. Helvering, 293 U.S. 465 (1935); and then citing Rice’s Toyota World, Inc. v. Comm’r, 752 F.2d 89, 91–92 (4th Cir. 1985)). ↑
  9.  See OECD,
    2017

    Model

    ,

    supra note 4. ↑

  10.  See Mason, supra note 2, at 364–65 (arguing that the G20/OECD’s project changed international tax’s participants, agenda, institutions, norms, and legal forms). ↑
  11.  See infra Part IV. ↑
  12.  See Sheppard, supra note 5, at 1148–49; Levy, supra note 5. ↑

Striking the Peremptory Strike: Why There Is No Freestanding Constitutional Entitlement to Peremptory Challenges

The peremptory challenge—used by parties to remove prospective jurors without the need to provide a reason—has become one of the most controversial features of the modern American jury system. Despite Batson v. Kentucky’s promise to prohibit parties from using peremptory challenges to exclude jurors from serving because of their race, lawyers have learned to adjust their explanations so as to avoid violating the commands of Batson. States have begun to reform their systems of challenging jurors peremptorily in response. While some states have fashioned a list of presumptively invalid race-neutral justifications for exercising peremptory challenges, one state—Arizona—went the furthest by abolishing peremptory challenges altogether. This prompted Professor Richard Jolly to write an article arguing that the complete abolition of the peremptory challenge is unconstitutional. From his review of common law history, early American practice, and the text of the Sixth Amendment, Jolly concludes that peremptory challenges are implicit in the Sixth Amendment’s guarantee of an “impartial jury.” This Note is a direct response to Jolly’s article. It examines over a century of court precedent as well as common law history, early American practice, and the text of the Sixth Amendment to determine if there is a freestanding constitutional entitlement to peremptory challenges. The analysis in this Note reaches the opposite conclusion: the peremptory challenge is unequivocally not required by the Constitution and, as such, Arizona and any other state that decides to abolish the peremptory challenge would not violate the Sixth Amendment.

Introduction

Once hailed by William Blackstone as “a provision full of that tenderness and humanity to prisoners, for which our English laws are justly famous,”1 1.4 William Blackstone, Commentaries *353.Show More peremptory challenges have been deemed by modern critics as “the most undemocratic feature of our democratic trial system,”2 2.Albert W. Alschuler, The Supreme Court and the Jury: Voir Dire, Peremptory Challenges, and the Review of Jury Verdicts, 56 U. Chi. L. Rev. 153, 156 (1989).Show More the “[l]ast [b]est [t]ool of Jim Crow,”3 3.Morris B. Hoffman, Peremptory Challenges Should Be Abolished: A Trial Judge’s Perspective, 64 U. Chi. L. Rev. 809, 827 (1997).Show More and “an instrument that undermines society’s evolving attempts to ensure that juries fairly represent the judgment of the community.”4 4.Raymond J. Broderick, Why the Peremptory Challenge Should Be Abolished, 65 Temp. L. Rev. 369, 399 (1992).Show More Prospective jurors can be struck from the jury venire through two methods: challenges for cause and peremptory challenges. Challenges for cause allow for rejection of venire members “on a narrowly specified, provable and legally cognizable basis of partiality.”5 5.Swain v. Alabama, 380 U.S. 202, 220 (1965).Show More Peremptory challenges, on the other hand, are exercised “without a reason stated, without inquiry and without being subject to the court’s control.”6 6.Id.Show More An unlimited number of potential jurors can be challenged for cause, while only a limited number of potential jurors, as specified by statute, may be challenged peremptorily.7 7.See Thomas Ward Frampton, For Cause: Rethinking Racial Exclusion and the American Jury, 118 Mich. L. Rev. 785, 788 (2020).Show More And while a judge must find that a potential juror is indeed biased before approving a challenge for cause, peremptory strikes receive no such scrutiny unless subject to a Batson challenge.8 8.See id. In Batson v. Kentucky, the Supreme Court held that the Equal Protection Clause prohibits parties from using peremptory strikes to exclude jurors from serving because of their race. 476 U.S. 79 (1986).Show More In an ideal world, the process will end with a right “fundamental to the American scheme of justice”9 9.Ramos v. Louisiana, 140 S. Ct. 1390, 1397 (2020) (quoting Duncan v. Louisiana, 391 U.S. 145, 149 (1968)).Show More: an impartial jury.

Because peremptory challenges can be employed at the complete discretion of parties and because they do not require a judge’s approval, parties frequently use them to strike potential jurors based on stereotypes that may go beyond their ability to decide a case impartially.10 10.One study found that prosecutors in North Carolina used sixty percent of their peremptory challenges against Black jurors, who constituted only thirty-two percent of the venire, while defense attorneys used eighty-seven percent of their strikes against white jurors, who constituted sixty-eight percent of the venire. Mary R. Rose, The Peremptory Challenge Accused of Race or Gender Discrimination? Some Data From One County, 23 Law & Hum. Behav. 695, 697–99 (1999). Another study that examined strikes in 390 jury trials in Jefferson Parish, Louisiana, found that prosecutors struck Black prospective jurors at over three times the rate they struck white prospective jurors. Richard Bourke, Joe Hingston & Joel Devine, La. Crisis Assistance Ctr., Black Strikes: A Study of the Racially Disparate Use of Peremptory Challenges by the Jefferson Parish District Attorney’s Office 4, 7 (2003).Show More While each party is required under Batson v. Kentucky to provide a race-neutral explanation for a peremptory strike if the opponent of the strike makes out a prima facie case of racial discrimination, lawyers have learned to adjust their reasons so as not to violate the commands of Batson.11 11.See Nancy S. Marder, Justice Stevens, the Peremptory Challenge, and the Jury, 74 Fordham L. Rev. 1683, 1706 (2006) (“Although Batson was an earnest attempt to root out discriminatory peremptories, Batson is so easy to circumvent that it allows a charade in the courtroom. Instead of giving race or gender as a reason for excluding jurors, lawyers can give any other reason no matter how ‘silly or superstitious.’” (quoting Purkett v. Elem, 514 U.S. 765, 768 (1995) (per curiam))).Show More As one judge noted, “Surely, new prosecutors are given a manual, probably entitled, ‘Handy Race-Neutral Explanations’ or ‘20 Time-Tested Race-Neutral Explanations.’”12 12.People v. Randall, 671 N.E.2d 60, 65 (Ill. App. Ct. 1996).Show More Such race-neutral explanations can include, and have included, clothing, body language, lack of eye contact, and the way a potential juror wears their hair.13 13.See Marder, supra note 11, at 1706.Show More The ease with which parties are able to avoid Batson violations led Justice Breyer to remark that “the use of race- and gender-based stereotypes in the jury-selection process seems better organized and more systematized than ever before.”14 14.Miller-El v. Dretke, 545 U.S. 231, 270 (2005) (Breyer, J., concurring); see also Hoffman, supra note 3, at 829 (“From Reconstruction through the civil rights movement, the peremptory challenge was an incredibly efficient final racial filter.”); Equal Just. Initiative, Illegal Racial Discrimination in Jury Selection: A Continuing Legacy 4 (2010) (“[T]here is perhaps no arena of public life . . . where racial discrimination is more widespread, apparent, and seemingly tolerated than in the selection of juries.”).Show More

The problems prompted by peremptory challenges have led scholars and practitioners alike to call for reform15 15.See, e.g., Charles J. Ogletree, Just Say No!: A Proposal to Eliminate Racially Discriminatory Uses of Peremptory Challenges, 31 Am. Crim. L. Rev. 1099 (1994); Annie Sloan, “What to Do About Batson?”: Using a Court Rule to Address Implicit Bias in Jury Selection, 108 Calif. L. Rev. 233 (2020); Robert T. Prior, The Peremptory Challenge: A Lost Cause?, 44 Mercer L. Rev. 579 (1993); Joshua Revesz, Comment, Ideological Imbalance and the Peremptory Challenge, 125 Yale L.J. 2535 (2016); Jere W. Morehead, When a Peremptory Challenge Is No Longer Peremptory: Batson’s Unfortunate Failure to Eradicate Invidious Discrimination From Jury Selection, 43 DePaul L. Rev. 625 (1994); Alafair S. Burke, Prosecutors and Peremptories, 97 Iowa L. Rev. 1467 (2012); Jeffrey Bellin & Junichi P. Semitsu, Widening Batson’s Net to Ensnare More Than the Unapologetically Bigoted or Painfully Unimaginative Attorney, 96 Cornell L. Rev. 1075 (2011).Show More or the complete elimination of peremptory challenges,16 16.E.g., Hoffman, supra note 3, at 810; Marder, supra note 11, at 1684; LaCrisha L.A. McAllister, Closing the Loophole: A Critical Analysis of the Peremptory Challenge and Why It Should Be Abolished, 48 S.U. L. Rev. 303, 304 (2021); Brent J. Gurney, Note, The Case for Abolishing Peremptory Challenges in Criminal Trials, 21 Harv. C.R.-C.L. L. Rev. 227, 230 (1986); Kenneth J. Melilli, Batson in Practice: What We Have Learned About Batson and Peremptory Challenges, 71 Notre Dame L. Rev. 447, 503 (1996); Batson v. Kentucky, 476 U.S. 79, 102–03 (1986) (Marshall, J., concurring) (“The decision today will not end the racial discrimination that peremptories inject into the jury-selection process. That goal can be accomplished only by eliminating peremptory challenges entirely.”).Show More with some scholars even going so far as to suggest that peremptory challenges are unconstitutional.17 17.See, e.g., Broderick, supra note 4, at 399 (suggesting that peremptory challenges contravene the Equal Protection Clause, the Thirteenth Amendment, and the Sixth Amendment).Show More States have taken heed. In the span of just a few years, various states have reformed their approach to peremptory strikes to attempt to counter discrimination in the selection of juries. The reforms generally fall into two camps.

The first approach is modeled after Washington’s General Rule 37 (“GR 37”).18 18.Wash. Ct. GR 37.Show More GR 37 identifies seven facially race-neutral justifications for a peremptory strike that have been “historically . . . associated with improper discrimination in jury selection” and makes them “presumptively invalid.”19 19.Wash. Ct. GR 37(h).Show More Such “presumptively invalid” justifications include, inter alia, “having prior contact with law enforcement officers” and “having a close relationship with people who have been . . . arrested.”20 20.Wash. Ct. GR 37(h).Show More GR 37 differs from Batson in other key respects. For example, GR 37 does not impose an initial burden of production on one who challenges a peremptory strike,21 21.See Wash. Ct. GR 37(c)–(d).Show More it places restrictions on the invocation of “[c]onduct” to justify a strike,22 22.Wash. Ct. GR 37(i).Show More and it does not require that the challenger prove “purposeful discrimination.”23 23.Wash. Ct. GR 37(f).Show More Other states, including California,24 24.Cal. Civ. Proc. Code § 231.7 (West 2025).Show More New Jersey,25 25.N.J. Stat. Ann § 1:8-3A (West 2025).Show More and Connecticut,26 26.Connecticut Practice Book § 5.12 (2025).Show More have followed Washington’s lead and adopted rules similar to GR 37.

The second approach to reform has been led by Arizona. The state considered two proposals for reform: one similar to Washington’s GR 37 and one that would eliminate peremptory strikes altogether.27 27.See Thomas Ward Frampton & Brandon Charles Osowski, The End of Batson? Rulemaking, Race, and Criminal Procedure Reform, 124 Colum. L. Rev. 1, 39–41 (2024).Show More On January 1, 2022, Arizona eliminated peremptory strikes entirely,28 28.See Order Amending Rules 18.4 and 18.5 of the Rules of Criminal Procedure, and Rule 47(e) of the Rules of Civil Procedure, In re Petition to Amend Rules 18.4 and 18.5 of the Arizona Rules of Criminal Procedure and Rule 47(e) of the Arizona Rules of Civil Procedure, No. R-21-0020 (Ariz. Aug. 30, 2021), https://www.azcourts.gov/Portals/0/20/2021%20Rules/‌R-21-0020%20Final%20Rules%20Order.pdf?ver=2021-08-31-105653-157 [https://perma.cc‌/R4XA-CKFH]; Ariz. Rev. Stat. Ann. § 18.4–.5 (2025).Show More in part because of a widespread perception that the Washington-style reform was “too woke.”29 29.See Frampton & Osowski, supra note 27, at 44 (quoting Telephone Interview by Thomas Ward Frampton & Brandon Charles Osowski with Kevin D. Heade, Chair, Cent. Ariz. Nat’l Laws. Guild (Sept. 22, 2022)).Show More Those involved in the decision also noted multiple advantages, many of which were realized by judges in Arizona during the COVID-19 pandemic when the Arizona Supreme Court sharply limited peremptory challenges by emergency administrative order.30 30.Id. at 37–38.Show More First, they stated that the abolition of peremptory strikes would significantly increase judicial efficiency.31 31.Id. at 43.Show More Voir dire can consume more time than the trial itself, often adding significant time and expense to trials and providing a significant advantage to wealthier parties.32 32.April J. Anderson, Peremptory Challenges at the Turn of the Nineteenth Century: Development of Modern Jury Selection Strategies as Seen in Practitioners’ Trial Manuals, 16 Stan. J. C.R. & C.L. 1, 5–6 (2020).Show More Second, they argued that it would eliminate the awkward “‘guesswork’ inherent in” judges’ determinations of lawyers’ motives for exercising strikes.33 33.See Frampton & Osowski, supra note 27, at 43 (quoting Charles W. Gurtler, Jr., Comment of the Committee on Superior Court at 3, In re Petition to Amend Rules 18.4 and 18.5 of the Arizona Rules of Criminal Procedure and Rule 47(e) of the Arizona Rules of Civil Procedure, No. R-21-0020 (Ariz. Apr. 12, 2021), https://www.azcourts.gov/DesktopModules/ActiveForu‌ms/viewer.aspx?portalid=0&moduleid=23621&attachmentid=9457 [https://perma.cc/EP8P-3‌NEE]).Show More Third, they noted that the abolition of peremptory strikes would eliminate other forms of discrimination outside of just racial discrimination.34 34.Id. at 43–45.Show More And fourth, they believed it would dispense with the concern that the GR 37 model would create a double standard, whereby defense counsel could use discriminatory strikes against white prospective jurors.35 35.Id. at 46.Show More

In response to Arizona’s change in jury selection procedure, Professor Richard Jolly published an article in the Vanderbilt Law Review arguing that the complete abolition of the peremptory challenge is unconstitutional.36 36.Richard Lorren Jolly, The Constitutional Right to Peremptory Challenges in Jury Selection, 77 Vand. L. Rev. 1529 (2024).Show More Despite the fact that the Supreme Court has “long recognized that peremptory challenges are not of constitutional dimension,”37 37.Ross v. Oklahoma, 487 U.S. 81, 88 (1988).Show More Jolly argues that “there is overwhelming textual, historical, and traditional evidence that peremptory challenges are of federal constitutional dimension.”38 38.Jolly, supra note 36, at 1535–36.Show More From his review of such evidence, Jolly concludes that peremptory challenges are implicit in the Sixth Amendment’s guarantee of an “impartial jury.”39 39.Id. at 1537–38 (quoting U.S. Const. amend. VI).Show More He goes on to argue that the right to challenge peremptorily is “unquestionably secure” in the context of capital offenses and “likely extends” to all criminal cases in which the jury trial right attaches.40 40.Id. at 1555. While Jolly concludes that peremptory challenges are also likely secured by the Seventh Amendment in civil trials, this Note is limited to analyzing the constitutional requirements of the Sixth Amendment.Show More

Jolly’s argument has massive implications for the future of jury selection. Today, nearly one-fifth of the country lives in a jurisdiction where the Batson framework does not govern peremptory strikes,41 41.Frampton & Osowski, supra note 27, at 3.Show More and at least eleven other states are currently considering reform.42 42.See Batson Reform: State by State, Berkeley L. Death Penalty Clinic, https://www.law.be‌rkeley.edu/experiential/clinics/death-penalty-clinic/projects-and-cases/whitewashing-the-jur‌y-box-how-california-perpetuates-the-discriminatory-exclusion-of-black-and-latinx-jurors/ba‌tson-reform-state-by-state/ [https://perma.cc/5LQF-MLA6] (last visited Sept. 28, 2025) (showing that states considering reform include Colorado, Iowa, Kansas, Massachusetts, Mississippi, Missouri, Montana, New York, North Carolina, Oregon, and Utah).Show More If Jolly’s argument is correct, then Arizona and any other state that follows its lead in abolishing the peremptory challenge would be in violation of the Constitution. Given the many calls to eliminate peremptory challenges, the question of whether such challenges are required by the Constitution is one that, as Jolly correctly states, “cannot be ignored.”43 43.Jolly, supra note 36, at 1554.Show More

This Note is a direct response to Jolly’s article. Like his article, this Note examines common law history, early American practice, and the text of the Sixth Amendment to determine if there is a freestanding constitutional entitlement to peremptory challenges. It also examines over a century of case law. The analysis in this Note reaches the opposite conclusion: the peremptory challenge is unequivocally not required by the Constitution and, as such, Arizona and any other state that decides to abolish the peremptory challenge would not violate the Sixth Amendment in doing so.

To make the argument, this Note proceeds in four parts. Part I provides a history of the peremptory challenge both at common law and in early American practice. Part II presents over a century of case law demonstrating that an impartial jury protects against the existence of actual bias on the petit jury. Because peremptory challenges minimize the perception of bias as opposed to actual bias, such challenges fall outside the ambit of the Sixth Amendment’s safeguards. Despite clear precedent from the Supreme Court that the peremptory challenge is not of federal constitutional dimension, Jolly argues that the Court has never fully analyzed its common law history, early American practice, and the text of the Sixth Amendment. Part III does just that. It first argues that peremptory challenges cannot be considered essential to an impartial jury because although criminal defendants had a right to use peremptory challenges in capital cases at common law and in early American practice,44 44.See infra notes 63, 68–72 and accompanying text.Show More no such right existed in noncapital cases.45 45.See infra notes 161–66 and accompanying text.Show More While Jolly attempts to employ a textualist argument to claim that peremptory challenges are nevertheless secured in noncapital cases as well as capital cases, his argument ultimately fails for both textualist and logical reasons. Part III goes on to demonstrate that the modern conception of the relationship between peremptory challenges and the impartial jury requirement is historically incongruous with the original purpose, use, and procedure of the peremptory challenge. Lastly, Part IV briefly discusses the implications of freezing practice at the time of the ratification of the Sixth Amendment to determine what rights are included in the guarantee of an impartial jury, warning that such a jurisprudential approach may actually undermine the safeguards of the Sixth Amendment. Taken together, the case law, as well as historical, practical, and textual evidence, provides overwhelming proof that there is not a freestanding constitutional entitlement to peremptory challenges.

  1.  4 William Blackstone, Commentaries *353. ↑
  2.  Albert W. Alschuler, The Supreme Court and the Jury: Voir Dire, Peremptory Challenges, and the Review of Jury Verdicts, 56 U. Chi. L. Rev. 153, 156 (1989). ↑
  3.  Morris B. Hoffman, Peremptory Challenges Should Be Abolished: A Trial Judge’s Perspective, 64 U. Chi. L. Rev. 809, 827 (1997). ↑
  4.  Raymond J. Broderick, Why the Peremptory Challenge Should Be Abolished, 65 Temp. L. Rev. 369, 399 (1992). ↑
  5.  Swain v. Alabama, 380 U.S. 202, 220 (1965). ↑
  6.  Id. ↑
  7.  See Thomas Ward Frampton, For Cause: Rethinking Racial Exclusion and the American Jury, 118 Mich. L. Rev. 785, 788 (2020). ↑
  8.  See id. In Batson v. Kentucky, the Supreme Court held that the Equal Protection Clause prohibits parties from using peremptory strikes to exclude jurors from serving because of their race. 476 U.S. 79 (1986). ↑
  9.  Ramos v. Louisiana, 140 S. Ct. 1390, 1397 (2020) (quoting Duncan v. Louisiana, 391 U.S. 145, 149 (1968)). ↑
  10.  One study found that prosecutors in North Carolina used sixty percent of their peremptory challenges against Black jurors, who constituted only thirty-two percent of the venire, while defense attorneys used eighty-seven percent of their strikes against white jurors, who constituted sixty-eight percent of the venire. Mary R. Rose, The Peremptory Challenge Accused of Race or Gender Discrimination? Some Data From One County, 23 Law & Hum. Behav. 695, 697–99 (1999). Another study that examined strikes in 390 jury trials in Jefferson Parish, Louisiana, found that prosecutors struck Black prospective jurors at over three times the rate they struck white prospective jurors. Richard Bourke, Joe Hingston & Joel Devine, La. Crisis Assistance Ctr., Black Strikes: A Study of the Racially Disparate Use of Peremptory Challenges by the Jefferson Parish District Attorney’s Office 4, 7 (2003). ↑
  11.  See Nancy S. Marder, Justice Stevens, the Peremptory Challenge, and the Jury, 74 Fordham L. Rev. 1683, 1706 (2006) (“Although Batson was an earnest attempt to root out discriminatory peremptories, Batson is so easy to circumvent that it allows a charade in the courtroom. Instead of giving race or gender as a reason for excluding jurors, lawyers can give any other reason no matter how ‘silly or superstitious.’” (quoting Purkett v. Elem, 514 U.S. 765, 768 (1995) (per curiam))). ↑
  12.  People v. Randall, 671 N.E.2d 60, 65 (Ill. App. Ct. 1996). ↑
  13.  See Marder, supra note 11, at 1706. ↑
  14.  Miller-El v. Dretke, 545 U.S. 231, 270 (2005) (Breyer, J., concurring); see also Hoffman, supra note 3, at 829 (“From Reconstruction through the civil rights movement, the peremptory challenge was an incredibly efficient final racial filter.”); Equal Just. Initiative, Illegal Racial Discrimination in Jury Selection: A Continuing Legacy 4 (2010) (“[T]here is perhaps no arena of public life . . . where racial discrimination is more widespread, apparent, and seemingly tolerated than in the selection of juries.”). ↑
  15.  See, e.g., Charles J. Ogletree, Just Say No!: A Proposal to Eliminate Racially Discriminatory Uses of Peremptory Challenges, 31 Am. Crim. L. Rev. 1099 (1994); Annie Sloan, “What to Do About Batson?”: Using a Court Rule to Address Implicit Bias in Jury Selection, 108 Calif. L. Rev. 233 (2020); Robert T. Prior, The Peremptory Challenge: A Lost Cause?, 44 Mercer L. Rev. 579 (1993); Joshua Revesz, Comment, Ideological Imbalance and the Peremptory Challenge, 125 Yale L.J. 2535 (2016); Jere W. Morehead, When a Peremptory Challenge Is No Longer Peremptory: Batson’s Unfortunate Failure to Eradicate Invidious Discrimination From Jury Selection, 43 DePaul L. Rev. 625 (1994); Alafair S. Burke, Prosecutors and Peremptories, 97 Iowa L. Rev. 1467 (2012); Jeffrey Bellin & Junichi P. Semitsu, Widening Batson’s Net to Ensnare More Than the Unapologetically Bigoted or Painfully Unimaginative Attorney, 96 Cornell L. Rev. 1075 (2011). ↑
  16.  E.g., Hoffman, supra note 3, at 810; Marder, supra note 11, at 1684; LaCrisha L.A. McAllister, Closing the Loophole: A Critical Analysis of the Peremptory Challenge and Why It Should Be Abolished, 48 S.U. L. Rev. 303, 304 (2021); Brent J. Gurney, Note, The Case for Abolishing Peremptory Challenges in Criminal Trials, 21 Harv. C.R.-C.L. L. Rev. 227, 230 (1986); Kenneth J. Melilli, Batson in Practice: What We Have Learned About Batson and Peremptory Challenges, 71 Notre Dame L. Rev. 447, 503 (1996); Batson v. Kentucky, 476 U.S. 79, 102–03 (1986) (Marshall, J., concurring) (“The decision today will not end the racial discrimination that peremptories inject into the jury-selection process. That goal can be accomplished only by eliminating peremptory challenges entirely.”). ↑
  17.  See, e.g., Broderick, supra note 4, at 399 (suggesting that peremptory challenges contravene the Equal Protection Clause, the Thirteenth Amendment, and the Sixth Amendment). ↑
  18.  Wash. Ct. GR 37. ↑
  19.  Wash. Ct. GR 37(h). ↑
  20.  Wash. Ct. GR 37(h). ↑
  21.  See Wash. Ct. GR 37(c)–(d). ↑
  22.  Wash. Ct. GR 37(i). ↑
  23.  Wash. Ct. GR 37(f). ↑
  24.  Cal. Civ. Proc. Code § 231.7 (West 2025). ↑
  25.  N.J. Stat. Ann § 1:8-3A (West 2025). ↑
  26.  Connecticut Practice Book § 5.12 (2025). ↑
  27.  See Thomas Ward Frampton & Brandon Charles Osowski, The End of Batson? Rulemaking, Race, and Criminal Procedure Reform, 124 Colum. L. Rev. 1, 39–41 (2024). ↑
  28.  See Order Amending Rules 18.4 and 18.5 of the Rules of Criminal Procedure, and Rule 47(e) of the Rules of Civil Procedure, In re Petition to Amend Rules 18.4 and 18.5 of the Arizona Rules of Criminal Procedure and Rule 47(e) of the Arizona Rules of Civil Procedure, No. R-21-0020 (Ariz. Aug. 30, 2021), https://www.azcourts.gov/Portals/0/20/2021%20Rules/‌R-21-0020%20Final%20Rules%20Order.pdf?ver=2021-08-31-105653-157 [https://perma.cc‌/R4XA-CKFH]; Ariz. Rev. Stat. Ann. § 18.4–.5 (2025). ↑
  29.  See Frampton & Osowski, supra note 27, at 44 (quoting Telephone Interview by Thomas Ward Frampton & Brandon Charles Osowski with Kevin D. Heade, Chair, Cent. Ariz. Nat’l Laws. Guild (Sept. 22, 2022)). ↑
  30.  Id. at 37–38. ↑
  31.  Id. at 43. ↑
  32.  April J. Anderson, Peremptory Challenges at the Turn of the Nineteenth Century: Development of Modern Jury Selection Strategies as Seen in Practitioners’ Trial Manuals, 16 Stan. J. C.R. & C.L. 1, 5–6 (2020). ↑
  33.  See Frampton & Osowski, supra note 27, at 43 (quoting Charles W. Gurtler, Jr., Comment of the Committee on Superior Court at 3, In re Petition to Amend Rules 18.4 and 18.5 of the Arizona Rules of Criminal Procedure and Rule 47(e) of the Arizona Rules of Civil Procedure, No. R-21-0020 (Ariz. Apr. 12, 2021), https://www.azcourts.gov/DesktopModules/ActiveForu‌ms/viewer.aspx?portalid=0&moduleid=23621&attachmentid=9457 [https://perma.cc/EP8P-3‌NEE]). ↑
  34.  Id. at 43–45. ↑
  35.  Id. at 46. ↑
  36.  Richard Lorren Jolly, The Constitutional Right to Peremptory Challenges in Jury Selection, 77 Vand. L. Rev. 1529 (2024). ↑
  37.  Ross v. Oklahoma, 487 U.S. 81, 88 (1988). ↑
  38.  Jolly, supra note 36, at 1535–36. ↑
  39.  Id. at 1537–38 (quoting U.S. Const. amend. VI). ↑
  40.  Id. at 1555. While Jolly concludes that peremptory challenges are also likely secured by the Seventh Amendment in civil trials, this Note is limited to analyzing the constitutional requirements of the Sixth Amendment. ↑
  41.  Frampton & Osowski, supra note 27, at 3. ↑
  42.  See Batson Reform: State by State, Berkeley L. Death Penalty Clinic, https://www.law.be‌rkeley.edu/experiential/clinics/death-penalty-clinic/projects-and-cases/whitewashing-the-jur‌y-box-how-california-perpetuates-the-discriminatory-exclusion-of-black-and-latinx-jurors/ba‌tson-reform-state-by-state/ [https://perma.cc/5LQF-MLA6] (last visited Sept. 28, 2025) (showing that states considering reform include Colorado, Iowa, Kansas, Massachusetts, Mississippi, Missouri, Montana, New York, North Carolina, Oregon, and Utah). ↑
  43.  Jolly, supra note 36, at 1554. ↑
  44.  See infra notes 63, 68–72 and accompanying text. ↑

  45.  See infra notes 161–66 and accompanying text. ↑

Oligopoly Squared: Federalism and the New Legal Landscape Tackling the Dark Web of Drug Pricing

The pharmaceutical industry’s billion-dollar practice of inflating drug prices and shielding itself from accountability has brought immense public outcry and inspired a profusion of legal reforms. But the precise dynamics that enable this ongoing crisis remain obscure, impeding effective resolution. This Article examines the interplay between legislative, regulatory, and new governance approaches emerging at both the federal and state levels. It exposes how a seemingly singular problem of high drug costs unfolds as a complex series of mergers, collusions, and restrictive strategies throughout the healthcare supply chain.

The poster child of big pharma greed is insulin, the lifesaving drug of diabetics. This Article presents insulin as a case study in analyzing how a drug discovered long ago evolved, through product hopping and patent evergreening, into multiple brand-name products still under patent. It further illustrates how market concentration in each link of the drug delivery chain has substantially increased with impunity, spanning from big pharma to pharmacy benefit management (“PBM”) intermediaries that broker deals between drug manufacturers, insurers, and pharmacies. The compounding effects of horizontal and vertical integration of powerful industry actors—what this Article calls “oligopoly squared”—have enabled collusive deals, including formulary exclusion, secret rebates, spread pricing, and preferred pharmacy status, each designed to artificially inflate insulin prices.

Moving from the expository and descriptive to the analytical and prescriptive, this Article then presents an equally multifaceted framework to address these harmful effects, combining cost control and transparency laws, PBM regulation, patent law and U.S. Food and Drug Administration generics approval reforms, and antitrust enforcement. This Article explains why federal law should not be interpreted as preempting state regulation of pharmaceutical supply chains. This Article further analyzes efforts using cutting-edge theories of competition law in light of broader recent developments in adjudicating market power and collusion. Most importantly, this Article examines the newest approaches emerging in the landscape of market and legal levers—direct-to-consumer transparent pharmacies and the public production of drugs—and argues that these new governance models have the greatest potential to disrupt the concentrated market. By analyzing and integrating these diverse efforts through the lens of legal theory and practical impact, this Article not only charts the course of pharmaceutical drug industry reform but also offers broader implications for regulating complex industries.

Introduction

Escalating prescription drug prices have sparked an unprecedented wave of law and policy initiatives, with numerous lawsuits and legislative reforms emerging at both the federal and state levels. These efforts aim to tackle not only the exorbitant cost of prescription medications but also the opaque and entrenched practices in each link of a complex drug delivery chain.1 1.See infra Parts III–IV.Show More

The sheer scope and diversity of new legal reforms—spanning price controls, transparency mandates, patent law and generic drug approval reforms, antitrust enforcement, and, most recently, public drug production and direct-to-patient delivery—signal a seismic shift in the understanding of how legal frameworks can be deployed to disrupt concentrated markets and protect consumers. The breadth of legal actions provides a model for studying competition and industry regulation more broadly. This Article analyzes the contemporary momentum in which policymakers simultaneously leverage legislation, regulation, litigation, and market strategies to tackle a billion-dollar industry’s harmful practices. It shows how myriad efforts to directly regulate drug prices have stalled, proven ineffective, or been challenged in courts, including in a current case in which the Supreme Court recently denied certiorari.2 2.Pharm. Care Mgmt. Ass’n v. Mulready, 78 F.4th 1183 (10th Cir. 2023), cert. denied, 145 S. Ct. 2843 (2025) (mem.).Show More Analyzing the split circuit adjudication on federal preemption of such state reforms, this Article argues that the Court should have resolved the split by holding that state regulation of pharmaceutical supply chains is not preempted by federal law. The complex structure of the pharmaceutical industry presents a test case wherein federalism offers opportunities for democratic experimentalism and new multilevel governance reforms.3 3.On new governance theory and practice, see Orly Lobel, The Renew Deal: The Fall of Regulation and the Rise of Governance in Contemporary Legal Thought, 89 Minn. L. Rev. 342, 404–07 (2004) [hereinafter Lobel, The Renew Deal] (describing the paradigm shift in legal process from command and control to more collaborative participatory regulation); Orly Lobel, New Governance as Regulatory Governance, in The Oxford Handbook of Governance 65, 65 (David Levi-Faur ed., 2012) (explaining how new governance theory provides lessons for government and market stakeholders on how to collaborate toward shared goals); Orly Lobel, National Regulation in a Global Economy: New Governance Approaches to 21st Century Work Law, in 2 Labor and Employment Law and Economics 630, 640–41 (Kenneth G. Dau-Schmidt, Seth D. Harris & Orly Lobel eds., 2009) (applying new governance theory to workplace regulation); Orly Lobel, Setting the Agenda for New Governance Research, 89 Minn. L. Rev. 498, 499–502 (2004) (describing next steps in the developments of new governance theory and practice).Show More Preemption should be narrowly tailored to allow state laws designed to protect patients and enhance consumer welfare. Even more critically, this Article argues that the novel path of public drug manufacturing and delivery is an essential lever to directly disrupt this complex concentrated market.

Insulin is the poster child for high drug costs in the United States. Insulin prices in the United States have spiked shockingly high compared to those in other developed countries.4 4.Andrew W. Mulcahy & Daniel Schwam, RAND Corp., Comparing Insulin Prices in the United States to Other Countries 17 (2024) (“Compared with other countries, and in each insulin category, the United States had dramatically higher gross prices. The average U.S. manufacturer price per 100 IUs across all insulins was $22.68, compared with $3.75 in Canada, $2.20 in the United Kingdom, $2.79 in Mexico, and $2.37 across all non-U.S. OECD countries combined . . . .”).Show More A 2024 RAND report found that the price of insulin in the United States is more than nine times higher than the price of insulin in thirty-three comparison nations combined.5 5.Id. at v.Show More Even when accounting for rebates and discounts, U.S. net prices are still, on average, 2.3 times higher than those in other countries.6 6.Id.Show More Examining insulin as a case study for addressing skyrocketing drug prices reveals the need for the multifaceted framework presented in this Article. There are three manufacturers who make nearly all insulin sold in the United States: Eli Lilly, Novo Nordisk, and Sanofi.7 7.Judith A. Johnson, Cong. Rsch. Serv., IF11026, Insulin Products and the Cost of Diabetes Treatment 2 (2018).Show More These three dominant pharmaceutical manufacturers frequently engage in practices like product hopping and patent evergreening whereby they introduce slightly modified versions of brand-name drugs—often just before patent expiration—and aggressively market them to shift patients to the newly patented formulations.8 8.See infra Part I.Show More Although insulin was discovered more than a century ago, these practices prevent generic drugs from entering the market and competing with lower drug prices. Still, if drug manufacturers alone were engaging in anticompetitive tactics, reforming intellectual property law and generic drug approval could be a straightforward and effective solution. Unfortunately, the reality is far more complex. The American insulin industry is not simply an oligopoly; it represents what this Article terms an “oligopoly squared” market—the compounded effect of both market consolidation and restrictive tactics across complex supply chains.

Big pharma colludes with another highly concentrated industry that has largely operated under the radar: pharmacy benefit managers (“PBMs”).9 9.See infra Section II.B.Show More PBMs, while surprisingly understudied in legal scholarship, are the powerful middlemen who shape prescription drug delivery.10 10.See infra Section II.B.Show More PBMs determine formularies, the lists that dictate the prescription drugs that a health insurance plan covers.11 11.See infra Section II.B.Show More Three PBMs—CVS Caremark, Express Scripts, and Optum Rx—control this key intermediary role in the market.12 12.See Adam J. Fein, The Top Pharmacy Benefit Managers of 2024: Market Share and Key Industry Developments, Drug Channels Inst. (Mar. 31, 2025), https://www.drugchannels.net/2‌025/03/the-top-pharmacy-benefit-managers-of.html [https://perma.cc/XY38-T4BH] (“[Drug Channels Institute] estimates that for 2024, about 80% of all equivalent prescription claims were processed by three companies: the Caremark business of CVS Health, the Express Scripts business of Cigna, and the Optum Rx business of UnitedHealth Group.”).Show More The three lead manufacturers of insulin control more than ninety percent of the drug by value globally, and three PBMs control more than eighty percent of the prescription-management market.13 13.Claudia Martínez, Camille Romero & Natalia Sánchez Villalobos, Access to Med. Found., What Are Pharma Companies Doing to Expand Access to Insulin—and How Can Efforts Be Scaled Up? 4 (2022); Off. of Pol’y Plan., U.S. Fed. Trade Comm’n, Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies 2 (2024). The six largest PBMs manage nearly ninety-five percent of all prescriptions filled in the United States. Id. at 5.Show More Furthermore, for decades, PBMs have been engaging in both vertical and horizontal integration, further concentrating the market by purchasing other key players in the healthcare supply chain, including pharmacies and health insurance providers.14 14.See discussion infra Section II.D.Show More As this Article illustrates, the combined oligopolistic structure of the industry, alongside the complex regulatory scheme for pharmaceuticals and health care, has enabled the three leading insulin producers and three dominant PBM players to exploit legal loopholes, manipulate markets, and broker collusive deals, all while aggressively and continuously increasing the price of insulin and other drugs.

Public outcry over insulin prices has prompted congressional hearings, legislative and regulatory action, and pending litigation at both the state and federal levels. At the federal level, Congress enacted the Inflation Reduction Act of 2022, empowering Medicare to negotiate drug prices and capping out-of-pocket insulin costs at thirty-five dollars per month for Medicare patients.15 15.Bisma A. Sayed et al., Off. of the Assistant Sec’y for Plan. & Evaluation, U.S. Dep’t of Health & Hum. Servs., Insulin Affordability and the Inflation Reduction Act: Medicare Beneficiary Savings by State and Demographics 1 (2023), https://aspe.hhs.gov/sites/default/fil‌es/documents/bd5568fa0e8a59c2225b2e0b93d5ae5b/aspe-insulin-affordibility-datapoint.pdf [https://perma.cc/TL9A-QWJU]; Tami Luhby, More Americans Can Now Get Insulin for $35, CNN, https://www.cnn.com/2024/01/01/politics/insulin-price-cap/index.html [https://perma.‌cc/6TAR-FBEV] (last updated Jan. 2, 2024, 5:34 PM); Jay-Donavin Ved, The Inflation Reduction Act of 2022: Addressing Prescription Drug Coverage, 32 Annals Health L. Advance Directive 131, 131 (2023).Show More In 2024 alone, dozens of new bills were introduced in Congress to address the high costs of pharmaceutical drugs.16 16.See infra Part III.Show More A 2025 bipartisan bill, the Patients Over Profit Act, seeks to prevent the increasing vertical integration in health care, where insurance companies acquire provider practices, labs, specialty practices, and outpatient clinics—although in its current form, the bill leaves intact the consolidation between PBMs and pharmacies.17 17.Patients Over Profit Act, S. 2836, 119th Cong. (2025).Show More At the state level, this Article produces an original, comprehensive, and up-to-date mapping of the twenty-nine states, plus the District of Columbia, that have passed legislation to cap insulin prices, analyzing the potential benefits and risks of such direct price controls.18 18.See infra Section III.B, Figure IV, Table I.Show More Over the past few years, each of the fifty states has also enacted legislation to tackle the PBMs’ behaviors, through measures such as prohibiting PBMs’ exclusion of nonaffiliated pharmacies from health plans.19 19.T. Joseph Mattingly II, Maisie Lewis, Mariana P. Socal & Ge Bai, State-Level Policy Efforts to Regulate Pharmacy Benefit Managers (PBMs), 18 Rsch. Soc. & Admin. Pharmacy 3995, 3995, 3999 (2022).Show More The validity of these state reforms is uncertain in light of a circuit split regarding whether they are preempted by federal law. Moreover, in the past few years, and accelerating in 2024, state attorneys general across the country, as well as the Federal Trade Commission (“FTC”), have filed lawsuits against the major insulin manufacturers and PBMs, alleging anticompetitive practices and price-fixing.20 20.Many of these actions—including those by Arkansas, Illinois, Kansas, Mississippi, Montana, California, Louisiana, Puerto Rico, Hawaii, Arizona, Texas, Utah, Missouri, as well as by unions and local governments—have been consolidated. Docket, In re Insulin Pricing Litig., No. 3080 (J.P.M.L. May 9, 2023). The FTC filed its own complaint against PBMs, alleging violation of Section 5 of the FTC Act, 15 U.S.C. § 45, in September 2024. Complaint, In re Caremark Rx, LLC, No. 9437 (F.T.C. Sept. 20, 2024) [hereinafter FTC Complaint]. Class actions have also been filed by patients against insurers for paying PBMs inflated drug costs. Daniel Wiessner, Wells Fargo Sued Over Employee Prescription Drug Costs, Reuters (July 30, 2024), https://www.reuters.com/legal/wells-fargo-sued-over-employee-prescription-drug-costs-2024-07-30/ [https://perma.cc/7MM5-VF5N].Show More In 2023, those states filed In re Insulin Pricing Litigation, the consolidated multidistrict litigation centering on the allegations that major insulin manufacturers—such as Eli Lilly, Novo Nordisk, and Sanofi—colluded with PBMs—like CVS Caremark, Express Scripts, and Optum Rx—to artificially and fraudulently inflate the price of insulin.21 21.First Amended Complaint at 6, Arkansas ex rel. Rutledge v. Eli Lilly & Co., No. 22-cv-00549 (E.D. Ark. Aug. 8, 2022); Complaint at 6, Illinois ex rel. Raoul v. Eli Lilly & Co., No. 2022CH11699 (Ill. Cir. Ct. Dec. 2, 2022); Petition at 6, Kansas ex rel. Schmidt v. Eli Lilly & Co., No. 2022-cv-000735 (Kan. Dist. Ct. Dec. 2, 2022); Third Amended Complaint at 5, Mississippi ex rel. Fitch v. Eli Lilly & Co., No. 21-cv-00674 (S.D. Miss. Feb. 17, 2022).Show More Since 2023, the number of states in the multistate litigation has grown to include seventeen U.S. states and territories.22 22.These states and territories are Arizona, Arkansas, California, Hawaii, Illinois, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Ohio, Pennsylvania, Puerto Rico, Texas, Utah, and West Virginia. Docket, In re Insulin Pricing Litig., No. 3080.Show More Drawing on antitrust principles, this Article presents the first scholarly analysis of this sea of new lawsuits and contends that the pharmaceutical companies and pharmacy managers have conspired to artificially inflate drug prices, thereby exploiting the vulnerability of millions of patients.

California’s approach to high insulin prices is broader than most state reforms, the majority of which have focused solely on direct price controls. California’s legislation to cap the price of insulin was initially vetoed by Governor Gavin Newsom, though such caps were enacted in 2025.23 23.See Lexington Souers, State Legislation Provides Hope for Rising Insulin Costs, Council of State Gov’ts (Mar. 31, 2023), https://www.csg.org/2023/03/31/state-legislation-provides-h‌ope-for-rising-insulin-costs/ [https://perma.cc/6R4D-7937] (contrasting the legislation that Governor Newsom initially vetoed with insulin price cap legislation in eleven other states); Jess Berthold, CA Governor Just Vetoed Price Caps on Insulin. Now What?, Univ. of Cal. S.F. (Oct. 11, 2023), https://www.ucsf.edu/news/2023/10/426351/ca-governor-just-vetoed-pri‌ce-caps-insulin-now-what [https://perma.cc/8MPV-MT6D] (explaining California’s alternative plan to produce its own insulin for thirty dollars per vial); see also infra note 237 (detailing California’s newly enacted insulin price cap legislation).Show More In the wake of Newsom’s original veto, the state instead enacted a revolutionary state-produced insulin initiative. In 2023, California announced a contract with a nonprofit drugmaker, Civica Rx, to produce government-funded, affordable insulin. Named CalRx, the public program aims to develop, produce, and distribute generic drugs at low costs, starting with insulin.24 24.S.B. 852, 2020 Leg., Reg. Sess. (Cal. 2020).Show More This novel approach to public drug production has the potential to disrupt not just the diabetes medication market, but healthcare delivery more broadly. The next drug on the agenda is naloxone, a drug used to reverse opioid overdoses that the U.S. Food and Drug Administration (“FDA”) recently approved as an over-the-counter generic.25 25.Lynn La, California Will Buy Cheaper Naloxone to Stop Fentanyl Deaths, CalMatters (Apr. 30, 2024), https://calmatters.org/newsletter/california-fentanyl-deaths-naloxone/ [https:‌//perma.cc/KS48-3QPT]; see also Kristen Hwang, Newsom Committed California to Making Its Own Insulin. It’s at Least a Year Behind His Schedule, CalMatters (Jan. 15, 2025), https://c‌almatters.org/health/2025/01/insulin-production-gavin-newsom/ [https://perma.cc/K9FR-N‌X92] (detailing the ties between the state’s efforts to make both insulin and naloxone more affordable).Show More Other states, as well as a federal bill, are looking to emulate this public intervention. In parallel, market initiatives such as Transparency-Rx and Mark Cuban’s Cost Plus are emerging to bypass the dominant PBMs and directly disrupt the concentrated market of drug delivery.26 26.See infra Section V.A.Show More

The high cost of insulin and other essential medications is often framed as a straightforward, single-issue problem: drug prices are simply inflated by their sellers.27 27.See, e.g., Lev Facher, It’s the Insulin, Stupid: How Drug Pricing’s Simplest Case Study Became a Top Issue for 2020 Democrats, STAT News (Jan. 28, 2020), https://www.statnews.c‌om/2020/01/28/insulin-pricing-becomes-top-issue-for-democrats [https://perma.cc/GB8L-E‌VKQ] (“Even in a primary dominated by broader health care issues, insulin has emerged as particularly alluring campaign fodder for Democrats. Unlike more perplexing topics like health insurance reform or the cost of drug research, candidates have a plain and simple rallying cry for insulin: That it’s corporate profiteering.”).Show More However, this reductive view obscures the intricate web of market dynamics and regulatory vulnerabilities that sustain and exacerbate the crisis. The source of the illness lies in the inscrutable structures of the pharmaceutical market, characterized by concentrated but convoluted supply chains, opaque pricing mechanisms, and a labyrinth of middlemen whose incentives are misaligned with public health goals. This Article explains how the compounded structure of multiple oligopolies enables actors to leverage legal loopholes, exploit patent laws, and engage in explicit and tacit collusions that further entrench market dominance and stifle competition. What appears to be a straightforward economic issue is, upon closer examination, a systemic pathology supported by an inadequate legal landscape. This Article argues that it is precisely the reality of oligopoly squared that has resisted traditional regulation. Most importantly, by offering a rigorous analysis of the new legal landscape, this Article explains the comparative advantages and interplay between federal and state law and policy, uncovering why complex market structures require an antidote of equally robust legal innovation.

This Article makes three major contributions. First, it demonstrates that the high cost of drugs is not the result of a single problem but instead has emerged through a series of anticompetitive practices throughout the healthcare industry. Mining through the profusion of new congressional reports, governmental investigations, lawsuits, and interdisciplinary research, this Article presents the multiple ways in which key actors in the pharmaceutical supply chain engage in anticompetitive and unfair business practices that artificially inflate the costs of prescription drugs.

This Article’s second contribution is its timely, novel analysis of the ongoing court challenges to state law reforms aiming to address healthcare industry anticompetitive practices. In 2025, the Supreme Court denied a petition to help resolve Pharmaceutical Care Management Ass’n v. Mulready.28 28.78 F.4th 1183 (10th Cir. 2023).Show More The case presented the Court with a circuit split on whether state laws regulating PBMs are preempted by the federal Employee Retirement Income Security Act (“ERISA”) and Medicare Part D. The circuit decision was also in tension with a recent Supreme Court case, Rutledge v. Pharmaceutical Care Management Ass’n, wherein the Court unanimously upheld a state law regulating PBMs.29 29.141 S. Ct. 474 (2020).Show More Through an analysis of the preemption issues and long-standing case law balancing uniformity and federalism, this Article explains why the Court should have granted certiorari and ruled that the states clearly have the authority to regulate PBMs.

Third, this Article shows how the perfect storm of public outcry, new state and federal legislation, and escalating court battles presents a unique opportunity to study the comparative advantages of and interactions between legal approaches: legislative, regulatory, adjudicative, and public-private governance.30 30.On public-private governance theory and practice, see Lobel, The Renew Deal, supra note 3, at 344–45.Show More In particular, it classifies the law reforms into three emerging frontiers: (1) reforming patent law and drug approval regulations to prevent product hopping and encourage generic competition, as well as direct price caps and price transparency; (2) preventing horizontal and vertical collusions in the drug delivery chain, including by addressing the role of PBMs in brokering unfair formulary and rebate deals systems; and (3) launching innovative models for drug production and distribution, including transparent pharmacies and public manufacturing initiatives. This Article argues that among the many paths of law reform, the third category has the most revolutionary potential.

This Article proceeds in five parts. Part I presents insulin as a prominent example of a drug that was discovered long ago and has evolved into a variety of brand-name products that are still patented today because of big pharma’s manipulative product hopping and patent evergreening practices. Part II turns to the structure of the pharmaceutical and pharmacy benefit management markets, explaining how market concentration is compounded when each link in the drug delivery chain is dominated by powerful actors. It further describes the collusive practices among these actors that artificially inflate drug prices, including formulary exclusion, rebates, spread pricing, convoluted fees, and preferred pharmacy status. Part III documents and classifies the recent law reforms at both the state and federal levels, including cost control and cost transparency laws, PBM regulation, and antitrust lawsuits. This Part also analyzes the split circuit case law on federal preemption and argues that such preemption should be narrowly tailored to allow for democratic experimentalism. Part IV examines the dozens of new lawsuits by state attorneys general and the FTC that use antitrust and unfair competition law to put a stop to the range of collusive practices and deals between pharmaceutical manufacturers and PBMs. This Part analyzes frontiers of competition law and doctrine in relation to new enforcement efforts. Finally, Part V introduces the most novel approaches emerging in the landscape of market and legal levers: alternative public production and delivery of drugs.

The interplay between market realities and legal innovation described in this Article comes at a pivotal moment in the evolution of healthcare governance. This Article concludes by arguing that the emerging framework lends itself to examining more broadly the rich landscape of legal levers on consumer welfare, equitable access, and market competition. By analyzing this breadth of efforts through the lens of legal theory and practical impact, this Article aims not only to chart the course for pharmaceutical drug industry reforms, but also to explore broader implications for regulating complex concentrated industries.

  1.  See infra Parts III–IV. ↑
  2.  Pharm. Care Mgmt. Ass’n v. Mulready, 78 F.4th 1183 (10th Cir. 2023), cert. denied, 145 S. Ct. 2843 (2025) (mem.). ↑
  3.  On new governance theory and practice, see Orly Lobel, The Renew Deal: The Fall of Regulation and the Rise of Governance in Contemporary Legal Thought, 89 Minn. L. Rev. 342, 404–07 (2004) [hereinafter Lobel, The Renew Deal] (describing the paradigm shift in legal process from command and control to more collaborative participatory regulation); Orly Lobel, New Governance as Regulatory Governance, in The Oxford Handbook of Governance 65, 65 (David Levi-Faur ed., 2012) (explaining how new governance theory provides lessons for government and market stakeholders on how to collaborate toward shared goals); Orly Lobel, National Regulation in a Global Economy: New Governance Approaches to 21st Century Work Law, in 2 Labor and Employment Law and Economics 630, 640–41 (Kenneth G. Dau-Schmidt, Seth D. Harris & Orly Lobel eds., 2009) (applying new governance theory to workplace regulation); Orly Lobel, Setting the Agenda for New Governance Research, 89 Minn. L. Rev. 498, 499–502 (2004) (describing next steps in the developments of new governance theory and practice). ↑
  4.  Andrew W. Mulcahy & Daniel Schwam, RAND Corp., Comparing Insulin Prices in the United States to Other Countries 17 (2024) (“Compared with other countries, and in each insulin category, the United States had dramatically higher gross prices. The average U.S. manufacturer price per 100 IUs across all insulins was $22.68, compared with $3.75 in Canada, $2.20 in the United Kingdom, $2.79 in Mexico, and $2.37 across all non-U.S. OECD countries combined . . . .”). ↑
  5.  Id. at v. ↑
  6.  Id. ↑
  7.  Judith A. Johnson, Cong. Rsch. Serv., IF11026, Insulin Products and the Cost of Diabetes Treatment 2 (2018). ↑
  8.  See infra Part I. ↑
  9.  See infra Section II.B. ↑
  10.  See infra Section II.B. ↑
  11.  See infra Section II.B. ↑
  12.  See Adam J. Fein, The Top Pharmacy Benefit Managers of 2024: Market Share and Key Industry Developments, Drug Channels Inst. (Mar. 31, 2025), https://www.drugchannels.net/2‌025/03/the-top-pharmacy-benefit-managers-of.html [https://perma.cc/XY38-T4BH] (“[Drug Channels Institute] estimates that for 2024, about 80% of all equivalent prescription claims were processed by three companies: the Caremark business of CVS Health, the Express Scripts business of Cigna, and the Optum Rx business of UnitedHealth Group.”). ↑
  13.  Claudia Martínez, Camille Romero & Natalia Sánchez Villalobos, Access to Med. Found., What Are Pharma Companies Doing to Expand Access to Insulin—and How Can Efforts Be Scaled Up? 4 (2022); Off. of Pol’y Plan., U.S. Fed. Trade Comm’n, Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies 2 (2024). The six largest PBMs manage nearly ninety-five percent of all prescriptions filled in the United States. Id. at 5. ↑
  14.  See discussion infra Section II.D. ↑
  15.  Bisma A. Sayed et al., Off. of the Assistant Sec’y for Plan. & Evaluation, U.S. Dep’t of Health & Hum. Servs., Insulin Affordability and the Inflation Reduction Act: Medicare Beneficiary Savings by State and Demographics 1 (2023), https://aspe.hhs.gov/sites/default/fil‌es/documents/bd5568fa0e8a59c2225b2e0b93d5ae5b/aspe-insulin-affordibility-datapoint.pdf [https://perma.cc/TL9A-QWJU]; Tami Luhby, More Americans Can Now Get Insulin for $35, CNN, https://www.cnn.com/2024/01/01/politics/insulin-price-cap/index.html [https://perma.‌cc/6TAR-FBEV] (last updated Jan. 2, 2024, 5:34 PM); Jay-Donavin Ved, The Inflation Reduction Act of 2022: Addressing Prescription Drug Coverage, 32 Annals Health L. Advance Directive 131, 131 (2023). ↑
  16.  See infra Part III. ↑
  17.  Patients Over Profit Act, S. 2836, 119th Cong. (2025). ↑
  18.  See infra Section III.B, Figure IV, Table I. ↑
  19.  T. Joseph Mattingly II, Maisie Lewis, Mariana P. Socal & Ge Bai, State-Level Policy Efforts to Regulate Pharmacy Benefit Managers (PBMs), 18 Rsch. Soc. & Admin. Pharmacy 3995, 3995, 3999 (2022). ↑
  20.  Many of these actions—including those by Arkansas, Illinois, Kansas, Mississippi, Montana, California, Louisiana, Puerto Rico, Hawaii, Arizona, Texas, Utah, Missouri, as well as by unions and local governments—have been consolidated. Docket, In re Insulin Pricing Litig., No. 3080 (J.P.M.L. May 9, 2023). The FTC filed its own complaint against PBMs, alleging violation of Section 5 of the FTC Act, 15 U.S.C. § 45, in September 2024. Complaint, In re Caremark Rx, LLC, No. 9437 (F.T.C. Sept. 20, 2024) [hereinafter FTC Complaint]. Class actions have also been filed by patients against insurers for paying PBMs inflated drug costs. Daniel Wiessner, Wells Fargo Sued Over Employee Prescription Drug Costs, Reuters (July 30, 2024), https://www.reuters.com/legal/wells-fargo-sued-over-employee-prescription-drug-costs-2024-07-30/ [https://perma.cc/7MM5-VF5N]. ↑
  21.  First Amended Complaint at 6, Arkansas ex rel. Rutledge v. Eli Lilly & Co., No. 22-cv-00549 (E.D. Ark. Aug. 8, 2022); Complaint at 6, Illinois ex rel. Raoul v. Eli Lilly & Co., No. 2022CH11699 (Ill. Cir. Ct. Dec. 2, 2022); Petition at 6, Kansas ex rel. Schmidt v. Eli Lilly & Co., No. 2022-cv-000735 (Kan. Dist. Ct. Dec. 2, 2022); Third Amended Complaint at 5, Mississippi ex rel. Fitch v. Eli Lilly & Co., No. 21-cv-00674 (S.D. Miss. Feb. 17, 2022). ↑
  22.  These states and territories are Arizona, Arkansas, California, Hawaii, Illinois, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Ohio, Pennsylvania, Puerto Rico, Texas, Utah, and West Virginia. Docket, In re Insulin Pricing Litig., No. 3080. ↑
  23.  See Lexington Souers, State Legislation Provides Hope for Rising Insulin Costs, Council of State Gov’ts (Mar. 31, 2023), https://www.csg.org/2023/03/31/state-legislation-provides-h‌ope-for-rising-insulin-costs/ [https://perma.cc/6R4D-7937] (contrasting the legislation that Governor Newsom initially vetoed with insulin price cap legislation in eleven other states); Jess Berthold, CA Governor Just Vetoed Price Caps on Insulin. Now What?, Univ. of Cal. S.F. (Oct. 11, 2023), https://www.ucsf.edu/news/2023/10/426351/ca-governor-just-vetoed-pri‌ce-caps-insulin-now-what [https://perma.cc/8MPV-MT6D] (explaining California’s alternative plan to produce its own insulin for thirty dollars per vial); see also infra note 237 (detailing California’s newly enacted insulin price cap legislation). ↑
  24.  S.B. 852, 2020 Leg., Reg. Sess. (Cal. 2020). ↑
  25.  Lynn La, California Will Buy Cheaper Naloxone to Stop Fentanyl Deaths, CalMatters (Apr. 30, 2024), https://calmatters.org/newsletter/california-fentanyl-deaths-naloxone/ [https:‌//perma.cc/KS48-3QPT]; see also Kristen Hwang, Newsom Committed California to Making Its Own Insulin. It’s at Least a Year Behind His Schedule, CalMatters (Jan. 15, 2025), https://c‌almatters.org/health/2025/01/insulin-production-gavin-newsom/ [https://perma.cc/K9FR-N‌X92] (detailing the ties between the state’s efforts to make both insulin and naloxone more affordable). ↑
  26.  See infra Section V.A. ↑
  27. See, e.g., Lev Facher, It’s the Insulin, Stupid: How Drug Pricing’s Simplest Case Study Became a Top Issue for 2020 Democrats, STAT News (Jan. 28, 2020), https://www.statnews.c‌om/2020/01/28/insulin-pricing-becomes-top-issue-for-democrats [https://perma.cc/GB8L-E‌VKQ] (“Even in a primary dominated by broader health care issues, insulin has emerged as particularly alluring campaign fodder for Democrats. Unlike more perplexing topics like health insurance reform or the cost of drug research, candidates have a plain and simple rallying cry for insulin: That it’s corporate profiteering.”). ↑
  28.  78 F.4th 1183 (10th Cir. 2023). ↑
  29.  141 S. Ct. 474 (2020). ↑

  30.  On public-private governance theory and practice, see Lobel, The Renew Deal, supra note 3, at 344–45. ↑

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