Pharma, Maryland Square Off Once Again Over Drug Pricing Controls

Contributor : Chris Silva : Senior Analyst

Publish date: 14 May, 2019

After suffering a bitter defeat to the pharmaceutical industry with the demise of their anti-price gouging law, Maryland lawmakers are attempting to rebound with a new bill that would create a prescription drug review board.

Living up to its reputation as one of the more proactive states when it comes to enacting cost-control measures, Maryland’s General Assembly passed a bill (HB 768/SB 0759) in April 2019 that would establish a Prescription Drug Affordability Board. Gov. Larry Hogan has until May 31, 2019, to veto or sign the bill, otherwise it becomes law without his signature.

The Board will be expected to conduct cost reviews of both generic and branded drugs that, according to the bill’s language, “must determine whether use of the prescription drug product has led or will lead to affordability challenges… or high out-of-pocket costs for patients.”

The bill would take effect July 1, 2019, if it makes it past the governor, but the real meat of the law would arrive Jan. 1, 2022, when the Board would be allowed to set upper payment limits for prescription drugs purchased by units of the state or local government, municipal employee benefit plans, or Maryland Medicaid. This would also include county correctional facilities, state hospitals, and health clinics at state higher education institutions.

Lawmakers in favor of the bill cite skyrocketing prescription drug expenditures, which are currently expected to exceed $462 billion in 2022.

The Board has drawn opposition from some state lawmakers who fear drug companies may simply decide to no longer do business in Maryland. The pharmaceutical industry also opposes the Board, which reportedly would be the first of its kind created by a state government. The Pharmaceutical Research and Manufacturers of America has stated the bill could cause consumers to wait longer for critical medicines while also having a chilling effect on new innovations (The Baltimore Sun, April 11, 2019).

It's widely expected pharma and Maryland will take this issue to the courts, as they had recently after Maryland passed its anti-price gouging bill. The bill was struck down after the Association for Accessible Medicines, which represents the interests of generic drug makers and distributors, sued the state to block the law, saying it overstepped in its attempts to regulate interstate commerce. In April 2018, the U.S. Court of Appeals for the Fourth Circuit found the legislation unconstitutional.

Chris Silva is a senior analyst at DRG and specializes in telehealth, blockchain, artificial intelligence, and drug pricing, among other topics. Follow him on Twitter at @ChrisSilvaDRG.

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