Maryland asks Supreme Court to uphold law on drug pricing

Maryland Attorney General Brian Frosh petitioned the U.S. Supreme Court on Friday to uphold a first-in-the-nation law against pharmaceutical price gouging.

The Maryland law, which was struck down by a federal appeals court panel this year, enabled the state's attorney general to sue makers of off-patent or generic drugs for price increases that state officials considered "unconscionable." That was defined as an excessive increase, unjustified by the cost of producing or distributing the drugs. Frosh noted that prices of generic drugs have skyrocketed in recent years.

"For decades generic drugs have been one of the best bargains in healthcare. In recent years, however, the price of generic drugs has sky-rocketed," Frosh said in a written statement. "In 2017, the General Assembly enacted the first-of-its-kind legislation to combat price gouging for generic medicines that have long been on the market and that are essential to the health of Marylanders. We are fighting to ensure Marylanders continue to have access to the essential generic medicines they need."

A panel of the Richmond, Virginia-based 4th U.S. Circuit Court of Appeals ruled 2-1 in April that the law is unconstitutional, because it forces manufacturers and wholesalers to act in accordance with Maryland law outside of Maryland, burdening interstate commerce.

Judge Stephanie Thacker wrote at the time that the Commerce Clause protects against inconsistent legislation arising from the projection of one state's regulations into the jurisdiction of another state. She also noted that the Maryland law had a "relatively subjective decision" about what constitutes an unlawful price increase.

But Judge James Wynn dissented. He wrote that Maryland is authorized to regulate matters of legitimate local concern. In the Maryland law, the state "legitimately targeted generic drug pricing practices specifically designed to prey on the special vulnerabilities of a defenseless group of Maryland's citizens."

In July, the federal appeals court turned down Frosh's petition that the full appeals court hear the case.

The law was challenged by the Association for Accessible Medicines, an organization with a membership of prescription drug manufacturers and wholesale distributers and others in the pharmaceutical industry.

Under the law, manufacturers faced fines of up to $10,000 per violation. The attorney general also was able to seek information from the corporations that instituted price increases to help determine if price gouging occurred.