Two Johns Hopkins medical school professors are urging the U.S. Supreme Court to revive a Maryland law aimed at preventing unwarranted price increases for generic drugs, calling access to affordable pharmaceuticals “a crucial issue for the public health.”
In papers filed with the justices, Gerard F. Anderson and Joshua M. Sharfstein said the significant presence of generic drugmakers and wholesalers in Maryland belies a federal appeals court’s conclusion that the price-protection law unconstitutionally encroaches on Congress’ exclusive authority to regulate interstate commerce. The Maryland General Assembly, in an effort to prevent price gouging, was validly focused on an industry within the state, Anderson and Sharfstein wrote in the brief filed last week.
The professors, “with all due respect, submit that the distribution and pricing of off patent and generic drugs offered for sale in Maryland is substantially more related to activities than the (appeals) court below may have appreciated,” they added. “Maryland’s significant involvement in the generic drug industry should be sufficient to justify the state’s interest and engagement in solving this public health issue.”
The professors submitted the brief, on their own behalf, in support of Maryland Attorney General Brian E. Frosh’s request that the justices review and overturn the 4th U.S. Circuit Court of Appeals 2-1 decision in April. The appeals court said the 2017 law directly regulates the price of generic drug transactions that occur outside the state, authority the Constitution’s Commerce Clause leaves to Congress and not to state legislatures.
The Association for Accessible Medicines, a generic-drug industry group, has successfully challenged the law’s constitutionality so far, while denying allegations of price gouging. AAM has until Jan. 14 to file its response to Frosh’s request for Supreme Court review.
The justices have not stated when they will vote on whether to hear the attorney general’s appeal in Brian E. Frosh et al. v. Association for Accessible Medicines, No. 18-546.
In their filing, the professors defended the law’s constitutionality, calling it the state’s limited response to increases in generic drug prices unrelated to higher production costs and which occurred when competition for a specific pharmaceutical was limited to three or fewer manufacturers.
“Most generic drugs are inexpensive, and the quality of all generic drugs is carefully regulated by the FDA,” the professors wrote, referring to the U.S. Food and Drug Administration.
“It is equally true, however, that a small handful of players in the off-patent and generic drug market have ‘gamed the system’ to impose astronomical increases in the price of some essential off-patent or generic drugs,” they added. “The Maryland statute at issue here addresses only these few bad actors. It is not aimed at the responsible manufacturers represented by (AAM).”
These AAM members include Baltimore-based manufacturer Lupin and makers Mylan, Apotex Corp. and Fresenius Kabi, which are are all registered as doing business within Maryland, the professors said to illustrate the industry’s presence in the state. In addition, wholesale distributor Cardinal Health has a large warehouse in Baltimore and distributors AmerisourceBergen and McKesson also hold Maryland Board of Pharmacy permits enabling them to distribute generic drugs in the state, the professors added.
Attorney James Dabney Miller, a senior associate in the Department of Health Policy & Management at the Johns Hopkins Bloomberg School of Public Health, is the counsel of record on the professors’ brief to the high court.
Anderson, a non-physician, directs the Johns Hopkins Center for Hospital Finance & Management, has written extensively on drug-pricing issues and has testified before Congress on health care finance issues and before the Maryland General Assembly in support of the controversial law.
Sharfstein, a physician, is a former Maryland health secretary, Baltimore health commissioner and principal deputy commissioner of the U.S. Food and Drug Administration.
The full 4th Circuit in July refused to review the three-judge panel’s decision, prompting Frosh’s bid for Supreme Court review, arguing that states may regulate generic-drug prices.
AAM has stated the law “would harm patients by damaging the national market for more affordable generic medicines” and that “the 4th Circuit correctly held that the State of Maryland does not have the power to regulate commercial transactions that occur outside of its borders.”
The law, which was to go into effect Oct. 1, 2017, would prohibit a significant price increase of an essential off-patent or generic drug and give the Maryland attorney general the power to order the manufacturer to explain the reasons behind a significant price boost as well as request a court order restraining or enjoining a violation.
Gov. Larry Hogan in June 2017 allowed the law to go into effect without his signature, citing his concerns about its constitutionality.
The Association for Accessible Medicines filed suit in July 2017, challenging the law as unconstitutional. U.S. District Judge Marvin J. Garbis, who sits in Baltimore, dismissed the Commerce Clause challenge, prompting AAM to appeal.