Maryland Sued by Generic-Drug Trade Group Over New Pricing Law -- Update
06 Juillet 2017 - 10:40PM
Dow Jones News
By Peter Loftus
A trade group for the generic-drug industry filed a lawsuit
Thursday seeking to block Maryland's new state law aimed at curbing
steep price increases for generic drugs, the first law of its kind
in the U.S.
The law, enacted in May and set to take effect in October, bars
"unconscionable" price increases for generic drugs. It authorizes
the Maryland attorney general to sue companies to try to roll back
certain price hikes and seek civil penalties of $10,000 per
violation.
It was enacted in response to what supporters said were
unjustified price increases for older drugs that are essential to
patients' health, such as Turing Pharmaceuticals' 5000% increase in
the price of the antiparasitic drug Daraprim in 2015.
The Association for Accessible Medicines, which represents more
than 20 generic-drug companies including Teva Pharmaceutical
Industries Ltd. and Mylan NV, filed its lawsuit in federal court in
Maryland against the state's attorney general and secretary of the
health department.
The lawsuit argues the law overreaches because it would affect
pricing decisions in other states, and that it too vaguely defines
what constitutes price gouging. It also alleges the law violates
the U.S. Constitution's commerce and due-process clauses.
The new law defines price gouging as an increase that is
"excessive and not justified by the cost of producing the drug or
the cost of appropriate expansion of access to the drug to promote
public health."
The lawsuit says the law amounts to a "sweeping price restraint"
with terms "so vague as to leave the state officials tasked with
implementing and enforcing the law nearly unbounded
discretion."
"There are absolutely no criteria, no guardrails, no parameters
of what constitutes an appropriate price increase or an excessive
price increase, " Chip Davis, president and CEO of the Association
for Accessible Medicines, said in an interview.
The lawsuit asks a federal judge to issue an injunction against
the implementation and enforcement of the law, and a declaration
that it's unconstitutional and invalid.
A spokeswoman for Maryland Attorney General Brian Frosh, a
Democrat, said the office is reviewing the lawsuit. Maryland Gov.
Larry Hogan, a Republican, allowed the law to become enacted
without his signature because he had concerns it wouldn't withstand
legal challenges, he said in a letter to the speaker of the
Maryland House of Delegates in May.
Mr. Frosh was a supporter of the new law. Last year, he was one
of 20 state attorneys general to sue several generic-drug makers,
including units of Mylan and Teva, accusing them of colluding to
fix prices on an antibiotic and a diabetes medication. Mylan and
Teva denied the allegations.
While steep price hikes for newer, brand-name drugs have sparked
criticism from patients and politicians, pricing for generic drugs
also is increasingly coming under scrutiny. The federal Government
Accountability Office issued a report in August finding that more
than 300 of 1,441 established generic drugs analyzed had at least
one extraordinary price increase of 100% or more between 2010 and
2015.
Maryland is one of about 30 states in which bills targeting high
drug prices have been introduced this year. Lobbyists for the
pharmaceutical industry have mounted aggressive campaigns in state
capitals to fight the legislation.
In June, Nevada's governor signed a bill to require
manufacturers of diabetes drugs, as well as industry middlemen
known as pharmacy-benefit managers, to disclose certain information
about costs and profits associated with the drugs.
Write to Peter Loftus at peter.loftus@wsj.com
(END) Dow Jones Newswires
July 06, 2017 16:25 ET (20:25 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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