AARP, Public Justice Center among nonprofits supporting Md. price gouging law

The constitutionality of Maryland’s law to curb sharp increases in the prices of generic drugs, scheduled for argument in the 4th U.S. Circuit Court of Appeals next month, has drawn the interest of regional and national nonprofit organizations who have submitted amicus briefs in support.

The law went into effect Oct. 1 and is the first of its kind. An industry group filed suit challenging the law, and in late September a federal judge dismissed the claim that the law violated the dormant Commerce Clause but allowed the case to move forward on the argument that it is too vague. He also denied the request for an injunction.

The Association for Accessible Medicine appealed the decision and arguments are scheduled for argument on Jan. 24.

Friend of the court briefs were filed Wednesday by two groups of nonprofits, including AARP, Public Justice Center and Disability Rights Maryland, supporting the legislation, which Attorney General Brian E. Frosh has yet to make use of in court.

“The rapidly rising cost of prescription drugs is a consistent source of anxiety and privation for older Americans,” the AARP brief states. “Even those who had good-paying jobs… are hit hard by drug prices.”

Generic drug manufacturers focus on groups “too small in number to cause reputational harm” for targeted price increases and develop strategies to keep prices high, which are not covered by regulations, according to the brief.

AARP is joined by Knowledge Ecology International, the Maryland Citizens’ Health Initiative Education Fund and Public Citizen Inc.

The second brief argues that rising prescription drug costs particularly affect “those with pre-existing disparate access to health care” like racial and ethnic minorities, individuals with disabilities and residents of low-income communities.

“Excessive prescription prices serve as a barrier to equal and quality health care for all and Maryland enacted its price-gouging law to control drug manufacturers seeking to take advantage of certain market conditions to the detriment of its residents,” the brief argues.

The Public Justice Center and Disability Rights Maryland are also joined by Maryland Citizens’ Health Initiative Education Fund in the brief.

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 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 the state would be prohibitive.

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.

Last month, the Chamber of Commerce of the United States filed an amicus brief in support of the AAM’s challenge to the law, which the chamber says will place local encumbrances on national commercial activities.

“(Maryland) has arrogated to itself the authority to directly regulate the out-of-state commercial transactions of these out-of-state companies,” the brief argues. “And it has asserted this power to impose severe sanctions based strictly on the fact that their products ultimately find their way, through the national chain of commerce, to a local retailer.”

The case is Association for Accessible Medicines v. Brian E. Frosh et al., 17-2166.

Daily Record Business Reporter Tim Curtis contributed to this report.