Please ensure Javascript is enabled for purposes of website accessibility

Will Md. drug price gouging bill shape national debate?

(Adobe Stock)

(Adobe Stock)

The drug Naloxone, often sold under the brand name Narcan, has become a critical tool in the fight against the opioid epidemic. But since the drug’s ability to counter overdoses became popularized in 2014, its price has more than doubled.

“It’s unconscionable that the generic drug of Naloxone has more than doubled in price,” said Dr. Leana Wen, the Baltimore City health commissioner. “For us, this is a matter of life and death. Nobody should be priced out of saving a life.”

The Naloxone increase came at the same time as skyrocketing prices of EpiPens and controversies with Turing Pharmaceuticals and Valeant Pharmaceuticals drastically boosted the price of generic drugs for which they were the only manufacturers.

“I think that it’s fair to say that we hear from our members who are concerned about sharp rises in prescription drug prices,” said Hank Greenberg, director of AARP Maryland.

This year the Maryland General Assembly passed a bill that will allow Attorney General Brian E. Frosh to investigate and take legal action against the manufacturers of off-patent drugs determined to be price gouging.

Supporters of the legislation predict it may well have a national impact.

The Maryland bill limits the attorney general’s powers to only off-patent or generic drugs and those considered essential.

It also only applies to drugs with three or fewer manufacturers on the market.

Gov. Larry Hogan has not yet taken action on the legislation, which passed both chambers with bipartisan veto-proof majorities.

First of its kind

The bill is the first of its kind in the nation, leaving consumer advocates and drug manufacturers watching how it could affect the prescription drug market.

“Just the enactment of this law will send a message to drug companies,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative. “There’s a new sheriff out there named Brian Frosh. … Companies across the country that do price gouging will feel the power of this law.”

The bill could act as a deterrent to price gouging, both in Maryland and nationally, said Dr. Jeremy Greene, a researcher and historian at Johns Hopkins University’s School of Medicine.

It would be unlikely that manufacturers set a different price for the state, compared to the rest of the country, he said.

“Creating state asymmetry helps create an argument for federal intervention,” Greene said.

That would be one way Maryland’s bill could have a national impact, he said. The other would be by inspiring other states to follow suit.

It has happened before. In the 1970s, Kentucky became the first state to allow generic drug substitution. It encouraged more states to follow suit until the practice became ubiquitous, Greene said.

But the bill won’t act as a panacea for rising drug prices.

“In terms of whether this legislation is the final answer of skyrocketing drug prices, I think it’s not,” said Danya Qato, an assistant professor at the University of Maryland, Baltimore, School of Pharmacy’s Department of Pharmaceutical Health Services Research. “I don’t think it’s the only answer; it’s one of many.”

Generics unhappy

While public health advocates praised the passage of the legislation, generic drug manufacturers opposed the bill.

“We’re unhappy with what passed and we are urging the governor to veto the legislation,” said Allen Goldberg, vice president of communications with the Association for Accessible Medicines.

The primary concern for these manufacturers is how competitive the marketplace will be with the law in effect.

“This creates a negative incentive for manufacturers to enter markets where they expect volatility,” said TJ Garrigan, director of policy at the Association for Accessible Medicines. “It prevents competition.”

Generics have served Maryland and the country well, Garrigan and Goldberg said. They provide needed drugs at a reduced cost, saving customers billions of dollars every year.

The association estimated that through Medicaid, Medicare and consumers buying drugs out-of-pocket, generic drugs have saved the state $3.7 billion a year.

Eighty-nine percent of the country’s prescription drugs are generic while only accounting for 27 percent of spending, they said.

“This bill jeopardizes those savings,” Goldberg said. “It is hard to fathom why a bill would target the one market in the pharmaceutical industry that is actually deflationary.”

But some of the bill’s supporters disagree that the bill would target the generics industry.

“The generic industry is not the target of this legislation,” Qato said. “Price gouging is the target of this legislation.”

Qato said the argument that the bill would decrease competition was a “red herring.” Greene expressed similar thoughts about that argument.

“It’s hard for me to see how that argument comes together,” he said. “The legislation as written has built-in guardrails so that the attorney general” is focused on off-patent price gouging.

The industry would not be opposed to a bill that fights bad actors, Garrigan said, but it opposes this bill.

“It’s a poorly targeted way of trying to get bad actors.”

The article was updated to reflect that generic drugs account for 27 percent of prespcription drug spending.

To purchase a reprint of this article, contact [email protected].