Judge re­fuses to block law on price-goug­ing

Drug mak­ers sued to halt state’s limit on generic pric­ing

Baltimore Sun - - NEWS - By Michael Dresser Baltimore Sun re­porter Erin Cox con­trib­uted to this ar­ti­cle. mdresser@balt­sun.com twit­ter.com/michaelt­dresser

Op­po­nents of a new law al­low­ing Mary­land to chal­lenge generic drug price­goug­ing lost the first round of a le­gal bat­tle Fri­day as a fed­eral judge re­fused to block the mea­sure.

U.S. Dis­trict Judge Marvin J. Gar­bis turned down a plea by a phar­ma­ceu­ti­cal in­dus­try group to is­sue an in­junc­tion against the law, which takes ef­fect Sun­day and em­pow­ers the Mary­land at­tor­ney gen­eral’s of­fice to chal­lenge drug prices it de­ter­mines to be un­con­scionable.

A spokesman for the as­so­ci­a­tion of drug mak­ers that brought the law­suit said the group was “dis­ap­pointed” by the rul­ing and in­tended to im­me­di­ately ap­peal it to the U.S. Court of Ap­peals for the 4th Cir­cuit.

The Demo­cratic-dom­i­nated Gen­eral As­sem­bly passed the leg­is­la­tion, the first of its kind in the United States, this past spring. Repub­li­can Gov. Larry Ho­gan al­lowed it to be­come law with­out his sig­na­ture, tac­itly con­ced­ing that a veto would be over­rid­den. On Fri­day, a spokesman said the gover­nor ex­plained in a May26let­ter that he gen­er­ally sup­ports ad­dress­ing the is­sue but is con­cerned about the way the bill does.

The rul­ing is a vic­tory for At­tor­ney Gen­eral Brian E. Frosh, a Demo­crat who ad­vo­cated for the bill’s pas­sage and suc­cess­fully de­fended it in the first part of what is likely to be a long le­gal chal­lenge.

“We think it’s a big vic­tory for Mary­land con­sumers,” Frosh said. “It re­ally will help pro­tect the health of peo­ple across our state.”

Frosh said he ex­pects an ap­peal but his of­fice will not wait to be­gin putting cases to­gether. He said mem­bers of the pub­lic can call his of­fice to re­port ex­ces­sive price in­creases.

Vin­cent DeMarco, who lob­bied for the bill’s pas­sage, com­mend­edFrosh for what he called “his ef­fec­tive de­fense of this life­sav­ing law.”

DeMarco, pres­i­dent of the Mary­land Cit­i­zens Health Ini­tia­tive, pledged to work closely with the at­tor­neyg gen­eral’s of­fice to help make sure the law works. He urged Mary­lan­ders to con­tact his or­ga­ni­za­tion to re­port ques­tion­able prices.

“For the first time in Amer­i­can his­tory, generic and off-patent drug man­u­fac­tur­ers can’t raise their prices so much that they hurt Mary­lan­ders with­out jus­ti­fi­ca­tion,” DeMarco said.

The As­so­ci­a­tion for Ac­ces­si­ble Medicines, a group rep­re­sent­ing generic drug man­u­fac­tur­ers and dis­trib­u­tors, ar­gued the law vi­o­lates the U.S. Con­sti­tu­tion’s pro­vi­sion giv­ing Congress the power to reg­u­late in­ter­state com­merce. It also con­tended the mea­sure vi­o­lates the 14th Amend­ment’s guar­an­tee of due process be­cause it is un­con­sti­tu­tion­ally vague.

Gar­bis dis­missed the group’s claim un­der the com­merce clause but al­lowed its claim that the law is too vague to con­tinue be­ing heard. He said that while he did not have enough in­for­ma­tion to rule on the mer­its of that claim, “it is at the very least plau­si­ble” the vague­ness ar­gu­ment could pre­vail.

How­ever, the judge de­clined to is­sue a pre­lim­i­nary in­junc­tion while the law­suit pro­ceeds. He noted that courts have held Gar­bis Frosh that such a move is an “ex­tra­or­di­nary rem­edy” that should only be granted if a lit­i­gant “clearly es­tab­lishes” it is en­ti­tled to the re­lief.

Gar­bis ruled the as­so­ci­a­tion hadn’t done so.

The judge re­jected the group’s claim the law vi­o­lated the com­merce clause. He said noth­ing in the leg­is­la­tion fa­vored in-state com­pa­nies over out-of-state drug mak­ers. He also found that the mea­sure would not pre­vent com­pa­nies from mak­ing prof­its and would only block their abil­ity to “ex­tract ex­ces­sive prof­its by price-goug­ing Mary­land con­sumers on es­sen­tial drugs for which there is limited com­pe­ti­tion.”

Jeff Francer, se­nior vice pres­i­dent of the As­so­ci­a­tion for Ac­ces­si­ble Medicines, said the group be­lieves the law un­con­sti­tu­tion­ally tries to reg­u­late busi­ness deals that hap­pen out of state. He said it cre­ates busi­ness con­di­tions that could lead some generic drug mak­ers to stop mak­ing a medicine al­to­gether.

“This law will hurt pa­tient ac­cess to safe, af­ford­able generic medicines in Mary­land and the rest of the U.S,” Francer said in a state­ment.

Gar­bis dis­missed that ar­gu­ment as “en­tirely spec­u­la­tive.”

“Lit­i­gants may not, with­out ad­e­quate fac­tual sup­port, hold courts hostage by re­sort­ing to these kinds of hy­po­thet­i­cal sce­nar­ios,” the judge wrote in a 40-page opin­ion.

The law was prompted by pub­lic re­vul­sion over some highly pub­li­cized ex­am­ples of com­pa­nies gain­ing con­trol of drugs for which there was a sin­gle man­u­fac­turer and max­i­miz­ing prof­its by jack­ing up prices — some­times by more than 1,000 per­cent.

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