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Maryland lawmakers pass a bill aimed at stopping ‘unconscionable’ drug pricing

Fierce Pharma
April 12, 2017
By Eric Sagonowsky

Taking the fight against high drug prices into their own hands, Maryland lawmakers passed a bill aimed at taking on “unconscionable” pricing practices with their sights set squarely on generics. But drugmakers are blasting back, hoping to convince the governor not to sign it into law.

Under the legislation, the Maryland Medical Assistance Program will notify Attorney General Brian Frosh if a generic drug’s price spikes by 50% in one year or if its price increases while there are three or fewer companies making the med, among other potential violations.

Then, the attorney general is able to request a report from drugmakers detailing production costs, rationale for the price hike and efforts to expand access. If Frosh determines the company committed a violation of the pricing law, he can request that a circuit court force it to roll back the price hike and return money to consumers.

Courts could also impose a fine of up to $10,000 for each violation under the law. Maryland Gov. Larry Hogan has not yet signed the bill, according to a spokesperson at his press office.

The generics industry’s lobby group, the Association for Affordable Medicines, is blasting the legislation, with CEO Chip Davis calling for a veto. In a statement, Davis said the legislation’s use of “unconscionable” pricing is a “vague and imprecise term that provides no meaningful standard by which companies may discern whether their prices set in the free market comply with the law.”

The law would give Maryland’s attorney general an “unbounded and unprecedented level of authority,” Davis said, likely forcing generic drugmakers to reconsider whether they can do business in the state.

Frosh disagreed, saying in a statement that the legislation gives the state a “necessary tool to combat unjustified and extreme price increases for medicines that have long been on the market,” but remain important for public health.

Even with a majority of lawmakers in the state supporting the new approach, The Maryland Public Policy Institute is skeptical. The nonpartisan group published a criticism of the bill arguing it’s not guaranteed to help consumers, but that it is a strong political move for lawmakers and an attorney general well aware of public anger over drug prices.

However, the legislation falls short of what state lawmakers initially sought. In February, the Maryland Senate considered a bill that would have required companies that make any drug, branded or generic, that costs more than $2,500 annually to file a report outlining spending on R&D, manufacturing and marketing.

Pharma pushed back, with one representative arguing at a hearing that such a requirement “could threaten future innovation by ignoring key aspects of the R&D process, and it includes disclosure of proprietary information.”

Maryland’s efforts come amid a national- and state-level dive into drug prices, with New York among those states pushing for more pharmaceutical regulations. There, Gov. Andrew Cuomo wants to create a board to control the costs of drug by determining a “fair price.” Again, that idea encountered heavy resistance from the pharma industry.

Last year, California voters turned down a ballot initiative that would have limited pharma’s pricing power, and now the industry is gearing up for a fight in Nevada, according to The Nevada Independent. A state senator recently introduced a measure to control prices on certain drugs, and the industry is enlisting lobbyists for the fight, according to the publication.

At the national level, President Donald Trump has repeatedly pledged to lower costs through increasing “competition,” while Congress considers proposals for drug importation and Medicare price negotiations. Rep. Elijah Cummings, an influential congressman from Maryland, has been involved in those talks and met with Trump to share his importation proposal last month.

Maryland is among a group of states who last year sued Heritage Pharma, Aurobindo Pharmaceuticals, Citron Pharma, Mayne Pharma, Mylan and Teva Pharmaceuticals, alleging price collusion.

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