Generic drug industry lawsuit blasts Maryland pricing law as 'unconstitutional and invalid'

The generic drug industry is calling for an injunction against a new pricing law in Maryland, set to take effect in October. Image: Bestbudbrian / CC BY-SA 4.0

With a generic drug pricing law set to take effect this fall in Maryland, the industry is pushing back hard with a lawsuit that says the regulation will “wreak untold disruptions” on the pharma industry nationally. 

In a suit (PDF) filed Thursday, the generic industry’s lobby group is asking for an injunction against the state’s HB 631, arguing that the regulation is overly vague, that it affects commerce outside of the state and that it stands to harm the public.

Passed last month, Maryland’s pricing law will outlaw “unconscionable” price hikes in the generic industry and gives the state’s attorney general Brian Frosh the power to ask companies to explain their drastic price increases. If he determines there’s been a violation of the law, Frosh could then ask a court to force drug companies to roll back their price hikes and pay up to $10,000 for each violation.

A fierce critic, the Association for Accessible Medicines says in its lawsuit the language in the regulation is overly vague, giving “state officials tasked with implementing and enforcing the law nearly unbounded discretion.” AAM’s members include Mylan, Sandoz, Teva and more than a dozen other generic drugmakers.

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Further, AAM’s suit says “HB 631’s sweeping price control reaches into every corner of the United States, if not beyond.” Drugmakers don’t price products on a state-by-state basis, meaning the Maryland law will impact their business around the country, the group says.

“The resulting lawsuits will wreak untold disruptions in the national pharmaceuticals market, limiting the ability of generic drug manufacturers to respond to national market changes and potentially forcing manufacturers to withdraw their less-costly generic products—on which many Marylanders and other Americans rely—from the marketplace entirely,” the lawsuit states. “Both AAM members and the public at large thus stand to suffer irreparable harm if HB 631 is implemented or enforced.”

Proponents such as Maryland’s Health Care for All initiative say the bill can lower costs by keeping a lid on off-patent drug prices, which can spike sporadically. In a statement, the nonprofit said drug companies are “wasting their time” with the lawsuit, calling the move “shameful.” The group said it’s confident Frosh can defend against the suit.

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While the law is set to take effect in October, even Maryland’s governor Larry Hogan didn’t necessarily agree with HB 631 as presented. He didn’t veto the bill, but also didn’t sign it and allowed it to become law.

In a letter on the decision in late May, Hogan wrote he’s “not convinced that this legislation is truly a solution to ensuring Marylanders have access to essential prescription drugs,” adding that it “may even have the unintended consequence of harming citizens by restricting their access to these drugs.”

According to analysts with Bernstein, Maryland’s law was the first concrete drug pricing regulation to make its way through state governments as lawmakers in more than 30 states look to take on the drug pricing issue. Nevada has also passed its own pricing bill aimed at bringing transparency to diabetes drug pricing.