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Md. lawmakers question legality of prescription drug bill

Republican Harford County Executive Barry Glassman, (center), Baltimore County Executive John Olszewski Jr. and Baltimore Mayor Catherine Pugh, Democrats, call for an end to the federal shutdown at a news conference in Annapolis Wednesday. (Bryan P. Sears)

Republican Harford County Executive Barry Glassman, (center), Baltimore County Executive John Olszewski Jr. and Baltimore Mayor Catherine Pugh, Democrats, support a proposal to create a prescription drug affordability board. (File photo) (Bryan P. Sears)

ANNAPOLIS — Legislation that would make Maryland the first state in the nation to regulate rising prescription drug prices was heard by legislators Wednesday, a month after the courts killed a Maryland law regulating generic drug prices.

The death of that generic drug law hung over the hearing as lawmakers wanted to make sure they passed a bill that the courts would uphold.

“I don’t think there’s anybody here who wouldn’t want to vote for this bill,” said Sen. Dolores Kelley, D-Baltimore County and chair of the Finance Committee. “We want to make sure that what we ask the committee can do, it can do, and that we have things carved out in a way that we get around the negatives that the feds sent back to us so it can do what we want done.”

Last month the U.S. Supreme Court let stand a 4th U.S. Circuit Court of Appeals decision that Maryland’s generic drug price gouging law violates the Constitution’s commerce clause.

That decision raised questions about whether this year’s legislative efforts to control drug prices would also fail to pass legal review.

The legislation, sponsored by Sen. Kathy Klausmeier, D-Baltimore County, and Del. Joseline Peña-Melnyk, D-Prince George’s and Anne Arundel, would create a prescription drug affordability board to review high prices when a brand name drug launches and when there are significant increases in the price. That includes drugs that launch at a price of more than $30,000 a year or which have price increases of $3,000 or more year to year.

The legislation would also allow the board to review prices for biosimilars and price increases for generic drugs.

After review, the board could set a limit on how much Marylanders would pay for that drug. Supporters said the bill would be different from the generic drug legislation because it would set payment limits, similar to how the state regulates hospitals and utilities, and not restrict what drugmakers can charge for prescription drugs.

“This would be constructed as an all-payer rate setting system,” Jane Horvath, a health policy consultant who helped craft the legislation, said. “All the payers know what they are limited to pay and the hospitals know what they are limited to charge.”

But when pressed by Sen. Steve Hershey, R-Upper Shore, Horvath admitted that comparisons to the Health Services Cost Review Commission that sets hospital rates and the Public Service Commission that sets utility rates, were not a “perfect analogy.”

“The state has provided (hospitals and utilities) with the market,” Hershey said. “This seems to be a little bit different, that we want to create a price control board here, but there’s no defined market, necessarily.”

Broad support

The prescription drug legislation has broad and bipartisan support across the state. The executives of Anne Arundel, Baltimore, Frederick, Harford, Howard, Montgomery and Prince George’s counties and Baltimore support the legislation.

Harford County Executive Barry Glassman said the rising cost of prescription drugs has affected his county’s budget, where it pays $4 million in drug costs for employees, plus even more for county retirees.

“As Harford County executive I can tell you that one of the areas that increases each year is our health care, particularly prescription drugs,” he told the Finance Committee.“These increases annually are not sustainable. They are not sustainable for small businesses.”

Glassman also serves as president of the Maryland Association of Counties, whose legislative committee voted unanimously Wednesday to support the legislation, he said.

Other groups to support the legislation include AARP of Maryland; MedChi, Maryland’s medical society; and the NAACP.

But drug manufacturers said the real issue lies with pharmacy benefit managers and other payers who negotiate rebates that consumers never see.

“Many actors, including middlemen like pharmacy benefit managers and insurers, determine the price a patient pays for their prescription medicine,” Nick McGee a spokesperson for the Pharmaceutical Research and Manufacturers of America, said in a statement. “Patients have little insight into how their out-of-pocket costs are being determined, if they are getting the best deal on their medicine and whether rebates and discounts are being passed onto them.”

Some Maryland based manufacturers warned that the legislation could drive them out of the state.

Murat Kalayoglu, CEO of Cartesian Therapeutics, said his company has raised millions of dollars in capital and hired highly skilled employees across four Maryland counties but that the prescription drug legislation would have made that difficult to do if it was in place.

“None of this would have been possible if pricing controls were in place,” he said. “I’m an investor, and I simply wouldn’t invest in Maryland biotech companies because it would tell me that Maryland does not get how drug development works and how risky it is.”

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