The U.S. Supreme Court has rejected Maryland’s bid to restore a law that state Attorney General Brian Frosh said was needed to protect residents from “monstrous price increases” by generic drug makers.
The high court declined Tuesday to review a federal appeals court's decision striking down the law, which Frosh and health care advocates championed as a groundbreaking attempt to rein in skyrocketing prescription costs.
The court’s decision was a setback to new efforts by states to keep down the cost of medicines. The law briefly went into effect, starting in 2017, before the 4th U.S. Circuit Court of Appeals put it on hold with its decision in April 2018.
The law was the first of its kind in the nation, although other states have considered similar measures.
It applied to generic or off-patent drug makers that manufacture a medicine at least three other firms also make. If those conditions applied, companies couldn’t impose a significant price increase without justifying it to the attorney general, who could ask a judge to order that the price increase not take effect. Violating the law carried a $10,000 fine.
The appeals court held the measure violated the U.S. Constitution by trying to regulate trade beyond Maryland’s borders.
That was the view of the plaintiff in the case, the Association for Accessible Medicines, which argued that under the Constitution’s commerce clause, the state lacked the authority for the law. The organization also said the measure could hurt competition by scaring companies out of the business of making generic drugs and thereby actually drive up prices.
The association said Tuesday in a statement that the law “would have allowed one state to dictate prices” in an otherwise competitive national market for generic medicines.
It called the decision “a victory for patients.”
Frosh said he was disappointed in the Supreme Court’s decision not to take up his appeal of the case, which came without comment from the court, as is customary.
“The problem is Maryland cannot protect itself from price gouging, and it leaves vulnerable people throughout our state subject to monstrous price increases by generic drug manufacturers,” he said.
Frosh, a Democrat, said Congress could seek a remedy, but that it has so far been unwilling “to prohibit the kind of price gouging that we have gone after.”
In the meantime, the attorney general and a citizens’ health group said they supported legislation in the General Assembly to establish a watchdog entity called the Prescription Drug Affordability Board to review costs and to establish caps people in Maryland could pay for drugs. Backers say the state already reviews prices set by public utilities and health insurers, and could do the same for drugs.
“We are disappointed that the Supreme Court will not reinstate Maryland’s landmark anti-price gouging law,” said Vincent DeMarco, president of the Maryland Citizens' Health Initiative. “This makes it even more imperative that the General Assembly pass the Prescription Drug Affordability Board legislation … which would make high cost drugs more affordable for Marylanders.”
The legislation has been proposed in the Senate by Kathy Klausmeier, a Baltimore County Democrat, and in the House by Prince George’s County Democrat Joseline Peña Melnyk. A Senate hearing on the measure is scheduled for next month.
Gov. Larry Hogan, a Republican, did not support the 2017 price-gouging act, which Frosh said was a response to the skyrocketing cost of generic drugs. The governor had expressed concern about the constitutionality of the legislation, saying it could violate the interstate commerce clause. He also criticized the definition of "excessive" drug prices as too vague.
But the governor — who said he supported keeping down prescription drug costs — let the measure take effect without his signature.