Generic Industry Group Sues Maryland Over Price Gouging Law

The Association for Accessible Medicines (AAM), a trade group representing US manufacturers of generic drugs and biosimilars, on Thursday sued Maryland over a new law that will impose fines on generic drugmakers if prices rise by too much or too quickly.

Maryland Gov. Larry Hogan (R) allowed the generic drug price gouging bill, HB 631, to become law in June, though he did not sign the bill and expressed reservations about "unintended consequences" as well as "legal and constitutional concerns."

AAM said in a statement: "The discriminatory law, an unconstitutional overreach passed in June 2017 scheduled to take effect in October 2017, grants Maryland unprecedented powers to regulate the national pharmaceutical market, violating the United States Constitution and posing harm to vulnerable patient communities."

In terms of why the law is illegal, AAM said the law violates the Commerce Clause of the US Constitution because it gives Maryland the power to regulate interstate commerce.

In addition, AAM said the "poorly crafted and loosely worded law" means the Maryland General Assembly has given the attorney general "extreme, arbitrary enforcement powers and would allow him to substitute his judgment for that of the free market. Companies would be forced to read the mind of the Attorney General to determine if he thought their negotiated prices were 'excessive.'"

Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, which supported the bill, said in a statement on Thursday: "We are fully confident that Attorney General Brian Frosh will successfully defend this life-saving law in court."