Maryland’s Court Petition Puts Price Gouging in National Spotlight

Contributors : Chris Silva : Senior Analyst, Market Access Insights

Publish date: 05 Nov, 2018

How the Supreme Court reacts to Frosh’s petition, filed Oct. 19, 2018, is sure to have ripple effects on a national scale.

Advocates for placing controls on escalating drug prices got some positive news when Maryland Attorney General Brian Frosh announced in mid-October he had filed a petition with the Supreme Court to review his floundering case.

Maryland’s General Assembly had passed a law in 2017 that reigned in drug price gouging tactics, and it went into effect Oct. 1, 2017. However, a federal appeals court ruled against it after a lawsuit was brought by the Association for Accessible Medicines, which represents the interests of generic drug makers and distributors.

That court's decision, announced in April 2018, reversed an earlier lower court's ruling that had upheld the law and refused AAM’s request for an injunction. Maryland was the first state to pass such legislation, and the attorney general's office would have used it to go after price increases deemed unreasonable. The appeals court ruling was a huge win for the pharmaceutical industry, which has maintained such laws would harm patients by reducing choice. The court’s reasoning in ruling against Maryland’s law was that it violates the U.S. Constitution’s commerce clause.

How the Supreme Court reacts to Frosh’s petition, filed Oct. 19, 2018, is sure to have ripple effects on a national scale. Anti-price gouging measures have received broad public support in the wake of pharma executives driving up costs. The most well-known recent case involves Martin Shkreli (a.k.a. “Pharma Bro”), who raised the price of Daraprim from $13.50 to $750 per fill, a 5,000 percent increase, after it was acquired by Turing Pharmaceuticals.

Several states have waged their own battles to improve transparency and price control mechanisms. In Nevada, two influential drug lobbying groups—PhRMA and BIO—dropped a lawsuit against legislation that requires pharmacy benefit managers and makers of diabetes drugs to disclose certain cost and profit information if prices are raised by a certain amount.

In California, a flurry of drug laws recently passed, including a drug pricing transparency law that forces companies to announce and explain large cost hikes. PhRMA also filed a lawsuit against this law, but it was dismissed by a district judge.

All eyes now will be on the Supreme Court and how it answers Frosh. If the attorney general prevails, don’t be surprised if other states feel emboldened to move forward with their own measures.

Chris Silva is a senior analyst at DRG and specializes in information technology, telehealth, and big data, among other topics. His work appears in Health Plan Analysis and Market Overviews. Follow him on Twitter at @ChrisSilvaDRG

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