Maryland targets generic ‘price gouging’ as states pursue pharma-pricing controls

Call it the anti-EpiPen or anti-Shkreli law: in early June, the Maryland General Assembly passed SB 631, an Act that targets off-patent and “essential” generics, enabling the state’s Attorney General to require documentation of price hikes, and possibly to enjoin the price hikes. Although passed into law, the state’s governor, Larry Hogan, did not sign it, and in a letter to the legislature, noted that the law might be unconstitutional restraint of trade, and had too vague a definition of “excessive” price increases. The law is said to be the first in the nation that targets generic rather than branded drug pricing, and the Assn. for Accessible Medicines (the former Generic Pharmaceutical Assn.) quickly took notice, filing suit in federal court in early July, also citing constitutional concerns and calling the law “poorly crafted,” “loosely worded” and “arbitrary.”

As written, the law allows the state AG to target any generic that is also on the WHO list of Essential Medicines (or so designated by the state’s health commissioner), and is manufactured by three or fewer companies, to be investigated when its price rises (under one clause) more than 50% in a given year. The AG could demand justifying statements for the increase; could petition court (presumably a state court) to enjoin a price hike, and/or impose a $10,000 fine. The AG has within it a Consumer Protection Division that is also involved.

It is highly unusual to target generic products for this sort of legislation; it could be that the AG and state assembly saw low-supply, suddenly expensive generics as low-hanging fruit in the ongoing drug-pricing confrontations. According to the National Conference of State Legislatures, 30 states are looking at over 150 bills regarding pharmaceutical pricing and payments in the 2017 legislative session; there have also been numerous bills introduced into the federal legislature. While the Trump administration has made a variety of statements about drug pricing, there is no publicly announced plan for addressing it.