Maryland Law Targeting Drug Prices Hits Legal Roadblock

Maryland’s House Bill (HB) 631, which is scheduled to take effect in October 2017, is facing a lawsuit filed by the Association for Accessible Medicines (AAM), which calls the bill unconstitutional.

AAM filed suit in a US district court in Maryland in July. The industry trade group says that the bill “grants Maryland unprecedented powers to regulate the national pharmaceutical market, violating the United States Constitution and posing harm to vulnerable patient communities.”

The bill, which targets price gouging (which the bill defines as “an unconscionable increase in the price of a prescription drug”) in the sale of off-patent or generic drugs, requires the Maryland Medical Assistance Program to notify the state’s attorney general of increase in the prices of generic or off-patent treatments, and authorizes the attorney general to:

• Require a drug manufacturer to turn over its records concerning the drug
• Authorize a circuit court to compel action or impose penalties of up to $10,000 per infraction on the drug manufacturer

AAM calls into question the bill’s focus on generic drugs as a way to save health costs for Maryland; according to the group, generic medications, which account for the majority of prescriptions written each year, saved Maryland $4.1 billion in 2016. The bill includes no provisions addressing the cost of patent-protected drugs.

When the Maryland legislature passed the bill, Governor Larry Hogan (R) declined to sign it, but allowed the legislation to pass into law. In a letter to the state’s Speaker of the House, Hogan expressed reservations about the bill, saying that it raised “legal and constitutional concerns,” and that he found it “troubling” that the bill did not target patent-protected drugs or medical devices. Hogan’s letter concluded with a statement that, in his view, the problem of drug pricing can only be addressed at a national or global level, and that state legislation such as HB 631 did not present a solution to the problem.

Maryland’s Attorney General Brian Frosh, however, has been a vocal supporter of HB 631, saying that the law will “give Maryland a necessary tool to combat unjustified and extreme price increases for medicines that have long been on the market and that are essential to our health and well-being.”