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Federal appeals court deals another setback to Maryland drug price-gouging law

A federal appeals court has dealt another setback to a Maryland law aimed at limiting price spikes for generic drugs.

The 4th Circuit Court of Appeals on Tuesday denied the request of Maryland Attorney General Brian E. Frosh for a re-hearing of a challenge to the law before the full court.

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A three-judge panel from the 4th Circuit ruled in April that the law, approved by state lawmakers in 2017, was unconstitutional.

The law gave the attorney general the authority to review price information about generic drugs. If the state’s lawyers could show that prices were being raised too steeply, they could seek to order the prices reduced, or issue fines to the drug companies.

An industry trade group, the Association for Affordable Medicines, challenged the law in court.

Frosh could let the ruling stand unchallenged or seek to take the case to the Supreme Court.

“We are reviewing the decision to determine our next steps,” said Raquel Coombs, a spokeswoman for Frosh’s office.

Vinny DeMarco is president of the Maryland Citizens’ Health Initiative, a group that lobbied for the bill. He said he was disappointed the case wouldn’t get a re-hearing, and “we will support the AG in whatever he chooses to do to defend the law.”

Jeff Francer, general counsel for the Association for Affordable Medicines, called the court ruling a victory for patients.

The association argues that states should not attempt to regulate prescription drugs, which are sold through a national marketplace. Other states have reviewed Maryland’s law and chosen not to take the same approach, Francer said.

“The Maryland drug pricing law was fatally flawed and only would have made the drug pricing problem worse by destabilizing the generic marketplace,” he said.

Nine of the 4th Circuit’s judges voted against re-hearing the case. Three judges voted in favor. Two judges did not vote.

Judge James A. Wynn Jr. voted in favor of a re-hearing before the full court. He wrote that the opinion of the three-judge panel “materially encroaches” on the state’s ability to pass laws that “protect the health, safety, and welfare of their citizens.”

“At a minimum,” he wrote, the case deserves “the careful deliberation of this entire Court.”

The law was developed and championed by Frosh, a Democrat, with support from legislative leaders and health advocacy groups.

It was opposed by drug companies and trade groups. They urged Gov. Larry Hogan to veto it, according to documents obtained by Common Cause Maryland through a Maryland Public Information Act request.

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Hogan, a Republican, did not veto the bill, instead noting his concerns but allowing it to become law without his signature while noting his concerns. His office did not respond to a request for comment Wednesday.

As the law been held up in litigation, DeMarco and others have tried a new tactic: a bill that would create a state commission to set prices for high-cost drugs, both generic and name-brand.

That bill failed in 2018, but advocates have pledged to try again next year. DeMarco hopes lawmakers and the next governor — whether it’s Hogan or his Democratic challenger, Ben Jealous — will support the drug cost commission.

“We want to work with whoever’s governor and make sure whoever’s governor doesn’t do what the drug companies want, when people want this legislation,” DeMarco said.

The campaign for Craig Wolf, Frosh’s Republican opponent in the attorney general’s race, said the latest court ruling underscores the attorney general’s poor choices regarding the law.

“This is just another example of Brian Frosh prioritizing politics over what’s best for Maryland residents,” said Dan Smith, Wolf’s political director.

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