AARP Maryland
December 6, 2017
Nancy Carr

Consistent with its longstanding efforts to reduce the cost of healthcare for older adults and all Americans, today AARP filed a friend of the court brief in AAM v. Frosh, No. 17-2166, (4th Cir.), supporting Maryland’s recently enacted HB 631—a law that prohibits unconscionable increases in the prices of generic drugs and drugs that have lost patent exclusivity.

“When companies raise the prices of drugs to astronomically high levels, not because it costs more to produce the drugs but simply to increase their profits on the backs of the terminally and chronically ill, we all suffer,” said Hank Greenberg, AARP Maryland State Director. “With the support of AARP, the State of Maryland passed this important new law to prevent this predatory practice.”

While the ink on the Governor’s signature was still fresh and before HB 631 was implemented, an association representing generic drug manufactures challenged it in court. Though the U.S. District Court allowed the suit to move forward on some claims, it also allowed the State to enforce the law while the case is pending. Dissatisfied with this result, the plaintiff asked the U.S. Court of Appeals for the Fourth Circuit to suspend enforcement while it litigates.

“AARP believes that Marylanders need immediate relief from drug price-gouging, so we wrote to urge the court to allow the law to be implemented now, because this challenge is unlikely to succeed,” said Greenberg. To help the court make its decision, AARP provided detailed information about the harms that drug price-gouging can do to patients, the healthcare system, and public coffers.

Drug price-gouging is never justified and must end, states AARP in the brief, which was drafted by attorneys from AARP’s charitable affiliate, AARP Foundation. In weighing the potential harm to the public of not enforcing Maryland’s anti-drug-price-gouging law, AARP told the Court of Appeals:

• Prescription drugs represent 17% of total healthcare costs in the U.S. and 19% of employer-based health insurance spending.

• In 2016, Americans paid about $50 billion out-of-pocket for prescription drugs; the federal government paid another $126 billion.

• Prescription drugs are the fastest growing healthcare expenditure, and low-cost generic and off-patent drugs are important to slowing that growth.

• 60% of Americans and 90% of older adults take prescription drugs.

• Older persons can least afford unconscionable increases in drug prices—they are more likely to have chronic health conditions requiring long-term drug therapy and already spend a disproportionate amount of their fixed incomes on drugs.

• Drug price-gouging is a pervasive problem that causes people to choose between treatment or other basic necessities, causes increases in prices of health insurance or limitations on prescription drug benefits, increases the costs of publicly funded insurance programs, and harms community hospitals.

The AARP brief notes that Maryland’s budget for fiscal year 2017 included $10 billion for its Medicaid program and $18 million to provide prescription drug assistance to about 28,700 income-eligible Medicare Part D recipients. If left unchecked, the effects of drug price-gouging in Maryland will be partially borne by these taxpayer-funded programs. Maryland’s law requires drug manufacturers and wholesalers to justify price increases in generic and off-patent drugs¬—this transparency will allow the State and the public to know if the price increase is truly justified or merely a gouging strategy to increase profits. It will allow the State to protect its citizens and its limited healthcare dollars.

“Maryland is entitled to put the industry’s declarations to the test: if AAM’s members need a 5,000% increase in prices, let them prove it.” AARP Brief at p. 22.

Several other organizations signed on to AARP’s brief: AARP Foundation, Knowledge Ecology International, The Maryland Citizens’ Health Initiative Education Fund, and Public Citizen.

Last modified: December 7, 2017