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Md. drug price-gouging bill allowed to go into law

A law scheduled to go into effect next month would prohibit a manufacturer or wholesale distributor from engaging in price gouging in the sale of an essential off-patent or generic drug and gives the Maryland attorney general the power to order the manufacturer to submit a statement explaining the reasons behind a significant price increase. (Deposit Photos)

The new Maryland law gives the Maryland attorney general the power to order the manufacturer to submit a statement explaining the reasons behind a significant price increase for a generic or off-patent drug. (Deposit Photos)

Maryland’s first-in-the-nation bill to prevent price gouging by prescription drug manufacturers will become law Oct. 1 after a U.S. District Court judge denied the Association for Accessible Medicine’s request for a preliminary injunction.

Judge Marvin J. Garbis granted the state of Maryland’s motion to dismiss the case on the grounds that the law would violate the dormant Commerce Clause. But Garbis ruled that the case can move forward on the association’s argument that the law is too vague.

“It’s a great ruling for us,” said Maryland Attorney General Brian Frosh. “We thought that the law was constitutional and reasonable, and we’re kind of surprised that the industry tried to make a facial challenge to it.”

HB 631 allows Frosh to investigate and take legal action against the manufacturers of off-patent drugs determined to be price gouging. The 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.

Under the law, Maryland’s attorney general has the power to order the manufacturer to submit a statement explaining the reasons behind a significant price increase as well as request a court order restraining or enjoining a violation. A violation also carries a civil penalty of up to $10,000 per violation.

The Association for Accessible Medicine, an industry group representing generic drug makers, said it would appeal Garbis’ decision to the 4th Circuit Court of Appeals.

The generic drug industry has warned that the law could have unintended consequences for Maryland, including the possibility that drug makers exit the market entirely because the costs of doing business in Maryland would be prohibitive.

“The Association for Accessible Medicines is disappointed with the district court’s decision not to enjoin Maryland’s price gouging statute, which even the district court recognized may be unconstitutionally
vague,” said Jeff Francer, senior vice president and general counsel for the association, in a statement. “As (the association) has stated from the outset, this law will hurt patient access to safe, affordable generic medicines in Maryland and the rest of the U.S., and will create untenable uncertainty for generic drug makers who may be left with no choice but to abandon markets altogether.”

Frosh said he plans to begin implementing the law Monday, but he is still not sure what that implementation will look like.

“Yes, we’ll be moving with enforcing it,” he said. “I think there will be a number of candidates.”

Frosh also said that the law should help Marylanders better pay for their prescription drugs.

“There are folks that will not have to choose, we hope, between (buying medicine) or paying rent and buying food,” he said. “We hope that this will not only help us enforce the law against the worst offenders but act as a disincentive against those that are tempted to violate the law.”

The law was a direct response to significant price increases at several generic drug manufacturers, including Turing Pharmaceuticals and Valeant Pharmaceuticals. Martin Shkreli became a household name when his Turing Pharmaceuticals raised the price of Daraprim from $13.50 per dose to $750.

“Just the law being in effect is important,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, a primary supporter of the law. “For the first time in American history, someone can stop that from happening. They’re going to have to think about the fact that they can’t do price gouging now.”

While HB 631 only addressed generic and off-patent drugs, DeMarco said he was working on legislation for the 2018 session of the General Assembly that would also apply to brand-name drug makers.

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