Judge refuses to block Maryland price-gouging law

Opponents of a new law allowing Maryland to challenge generic drug price-gouging lost the first round of a legal battle Friday as a federal judge refused to block the measure.

U.S. District Judge Marvin J. Garbis turned down a plea by a pharmaceutical industry group to issue an injunction against the law, which takes effect Sunday and empowers the Maryland Attorney General’s Office to challenge drug prices it determines to be unconscionable.

A spokesman for the association of drug makers that brought the lawsuit said the group was “disappointed” by the ruling and intended to immediately appeal it to the U.S. Court of Appeals for the Fourth Circuit.

The Democrat-dominated General Assembly passed the legislation, the first of its kind in the United States, this past spring. Republican Gov. Larry Hogan allowed it to become law without his signature, tacitly conceding a veto would be overridden. On Friday, a spokesman said the governor explained in a May 26 letter that he generally supports addressing the issue but is concerned about the way the bill seeks to do so.

The ruling is a victory for Attorney General Brian E. Frosh, a Democrat who advocated for the bill’s passage and successfully defended it in the first part of what is likely to be a long legal challenge.

“We think it’s a big victory for Maryland consumers,” Frosh said. “It really will help protect the health of people across our state.”

Frosh said he expects an appeal but his office will not wait to begin putting cases together. He said members of the public can call his office to report excessive price increases.

Vincent DeMarco, who lobbied for the bill’s passage, commended Frosh for what he called “his effective defense of this life-saving law.”

DeMarco, president of the Maryland Citizens Health Initiative, pledged to work closely with the Attorney General’s Office to help make sure the law works. He urged Marylanders to contact his organization to report questionable prices.

“For the first time in American history, generic and off-patent drug manufacturers can’t raise their prices so much that they hurt Marylanders without justification,” DeMarco said.

The Association for Accessible Medicines, a group representing generic drug manufacturers and distributors, argued the law violates the U.S. Constitution’s provision giving Congress the power to regulate interstate commerce. It also contended the measure violates the Fourteenth Amendment’s guarantee of due process because it is unconstitutionally vague.

Garbis dismissed the group’s claim under the commerce clause but allowed its claim that the law is too vague to continue being heard. He said that while he did not have enough information to rule on the merits of that claim, “it is at the very least plausible” the vagueness argument could prevail.

However, the judge declined to issue a preliminary injunction while the lawsuit proceeds. He noted that courts have held that such a move is an “extraordinary remedy” that should only be granted if a litigant “clearly establishes” it is entitled to the relief.

Garbis ruled the association hadn’t done so.

The judge rejected the group’s claim the law violated the commerce clause. He said nothing in the legislation favored in-state companies over out-of-state drug makers. He also found that the measure would not prevent companies from making profits and would only block their ability to “extract excessive profits by price-gouging Maryland consumers on essential drugs for which there is limited competition.”

Jeff Francer, senior vice president of the Association for Accessible Medicines, said the group believes the law unconstitutionally tries to regulate business deals that happen out-of-state. He said it creates business conditions that could lead some generic drug makers to stop making a medicine altogether.

“This law will hurt patient access to safe, affordable generic medicines in Maryland and the rest of the U.S,” Francer said in a statement.

Garbis dismissed that argument as “entirely speculative.”

“Litigants may not, without adequate factual support, hold courts hostage by resorting to these kinds of hypothetical scenarios,” the judge wrote in a 40-page opinion.

The law was prompted by public revulsion over some highly publicized examples of companies gaining control of drugs for which there was a single manufacturer and maximizing profits by jacking up prices — sometimes by more than 1,000 percent.

Baltimore Sun reporter Erin Cox contributed to this article.

mdresser@baltsun.com

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