Maryland Stand on Drug Pricing Riles Up Big Pharma

BALTIMORE (CN) — A trade group for generic drugmakers brought a federal complaint Thursday to block Maryland’s attempt of a crackdown on pharmaceutical price gouging.

Set to take effect in October without the signature of Republican Gov. Larry Hogan, House Bill 631 would give Attorney General Brian Frosh power to prosecute manufacturers that impose “unconscionable” price hikes on generic and off-patent drugs.

The price-gouging bill was passed by the Democrat-led General Assembly with near unanimous support this year and only governs off-patent and generic drugs, not branded medications protected by patent laws.

Gov. Hogan has voiced reservations about the law, however, citing the regulation of interstate commerce and possible violations of the 14th Amendment in a letter to the Speaker of the House Micheal Busch,.

The Association for Accessible Medicines echoed these concerns in the complaint filed on July 6 with a federal judge in Baltimore.

“If this new law goes into effect, it will harm patients and our communities by reducing choice and limiting access to essential medicines that people need,” Chip Davis, the group’s CEO, has said in a statement.

“Rather than allow the vibrant competition in the generic drug marketplace to continue working for patients, Maryland would become the first state to reject generic competition in favor of more government regulation – of generic drugs, the only segment of health care costs that is actually declining,” Davis added.

Noting that its members set prices for wholesalers across the country, the association says Maryland’s law will effectively control generic drug pricing far outside its borders.

Davis said companies faced with changing market conditions may decide to stop manufacturing a particular drug rather than run the risk of prosecution under the law.

In addition to claiming that Maryland’s law is pre-empted by the government’s authority to regulate interstate commerce, the group says the law is unconscionably vague, in violation of members’ due-process rights under the U.S. Constitution.

A spokeswoman for Frosh declined to comment on the litigation. The attorney general pressed the Legislature to approve the law as an expansion of his power to prosecute consumer protection matters.

The law applies to generic or off-patent drug makers that manufacture a medicine at least three other firms also make. If those conditions apply, companies can’t impose a significant price increase without justifying it to the attorney general, who can ask a judge to order that the price increase not take effect. Violating the law carries a $10,000 fine.

Though the price hikes of brand-name drugs like Daraprim and EpiPens have alarmed consumers and lawmakers alike in recent years, the Association for Accessible Medicines says that the generic drug industry has been instrumental in driving down the cost of many common medicines.

Gov. Hogan has faulted the Maryland law as well for not addressing the cost and accessibility of patented drugs and medical devices associated with drug delivery.

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