Earlier this year, the Supreme Court of the United States declined to hear a case involving a Maryland law that attempted to prevent drug makers from “price gouging” consumers.
Background
The Legislation
The law, passed by the Maryland General Assembly in 2017, would have prohibited generic drug manufacturers from raising prices in a manner deemed to be “unconscionable” by the state and applied to generic or off-patent drug makers that manufacture a medicine also made by at least three other firms. It also allowed the state attorney general to sue drug companies for increasing the prices of generic or off-patent drugs by 50% or more in one year if the AG found the price increase wasn’t justified.
The legislation was enacted after a series of high-profile price hikes of prescription drugs, including the 2015 increase of the price of Daraprim from $13.50 to $750 per pill by Turing Pharmaceuticals.
The Circuit Court of Appeals Case
In April 2018, the law was nullified when the United States Fourth Circuit Court of Appeals held that it was unconstitutional for regulating commerce beyond the borders of Maryland. According to the Court, the law created an undue burden on out-of-state competitors by regulating the price that was charged by manufacturers and wholesalers, rather than the price at which the drug is sold to consumers. Further, since most manufacturers of generic drugs and medication wholesalers engage in trade outside of the state of Maryland, the state is unable to control what prices they charge.
Mixed Reactions to the SCOTUS Decision
As is to be expected, reaction to the Supreme Court’s declination to get involved was mixed.
The Association for Accessible Medicines, a trade group representing generic drug manufacturers which brought the lawsuit to overturn the law, praised the Supreme Court’s ruling, “Today’s decision is a victory for patients who depend on a strong national market for generic and biosimilar medicines,” Rachel Schwartz, an AAM spokeswoman, said in a statement. “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.”
Vincent DeMarco, a public health advocate in Maryland, released a statement, referring to the decision as disappointing. However, he is not giving up, as his advocacy group, Maryland Citizens’ Health Initiative, is currently pushing for legislation to install a “Prescription Drug Affordability Board” in the state. That legislation has passed the House and is pending Senate approval.