February 22, 2019

Maryland tried to regulate price increases for generic drugs. After SCOTUS declined the case, the law is dead.

Daily Briefing

    The Supreme Court on Tuesday declined to hear a case centered on a Maryland law intended to prevent generic drug price gouging, effectively killing the statute, STAT News reports.

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    Law details

    Maryland enacted the law in 2017, becoming the first state to implement a law focused on regulating price increases for generic drugs. The law prohibited generic drugmakers from increasing prices for essential, off-patent drugs sold in the state in a manner the state considered "unconscionable," Reuters reports. According to the Baltimore Sun, the law required drugmakers seeking price increases for such drugs to justify the increases to the state's attorney general.

    However, a federal appeals court in April 2018 struck down the law, ruling that it violated the U.S. Constitution's Commerce Clause because it essentially would have regulated sales that occur outside of Maryland.

    Maryland appealed that ruling to the Supreme Court. According to Reuters, the state in legal filings argued that consumers had incurred substantial financial hardships because of generic drug prices hikes. The state also claimed that the appeals court's decision prevented states from regulating price increases that could harm consumers and public health, and could infringe on other state regulatory initiatives, Reuters reports.

    SCOTUS declines to hear case

    The Supreme Court's decision not to hear the case leaves in place the appeals court's ruling striking down the law.

    According to Reuters, the decision "deal[t] a setback to the power of states to rein in prescription drug costs." Though Maryland was the first state to implement such a law, other states were considering similar measures, the Baltimore Sun reports.

    Reaction

    Vincent DeMarco, president of the advocacy group Maryland Citizens' Health Initiative, said the group is "disappointed that the Supreme Court will not reinstate Maryland's landmark anti-price gouging law."

    Maryland Attorney General Brian Frosh (D) called on Congress to implement a policy to protect consumers against generic drug price hikes nationwide. "Price gouging of generic prescription drugs is well documented and a threat to the health of Marylanders. It's disappointing that the Supreme Court is not willing to allow our state to fix the problem," he said.

    But the Association for Accessible Medicines (AAM), an industry group representing generic drug manufacturers that file the lawsuit challenging the law, applauded the Supreme Court's decision. AAM spokesperson Rachel Schwartz in a statement said, "Today's decision is a victory for patients who depend on a strong national market for generic and biosimilar medicines." She added, "Maryland's law would have allowed one state to dictate prices in the competitive national market for generic medicines that saved patients and taxpayers $265 billion in 2017" (Facher, STAT News, 2/19; Chung, Reuters, 2/19; Barker, Baltimore Sun, 2/19; Cohrs, Inside Health Policy, 2/19 [subscription required]).

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