Supreme Court Refuses to Hear Appeal on Drug Price-Gouging Law, Ending State’s Legal Quest

The U.S. Supreme Court building in Washington, D.C.

The U.S. Supreme Court on Tuesday declined to consider Maryland Attorney General Brian E. Frosh’s bid to revive a state law aimed at preventing price gouging by pharmaceutical companies.

Frosh (D) had appealed a federal appeals court ruling that Maryland’s 2017 law regulating wholesale price gouging by prescription drug companies violated tenets of federal interstate commerce rules.

The state law prohibited what it labeled “unconscionable” price hikes for essential prescription drugs. But pharmaceutical manufacturers sought to overturn it in court – and have now succeeded.

By refusing to take up the case, the Supreme Court has ended the state’s legal options for restoring the law.

Vincent DeMarco, head of the Maryland Citizens’ Health Initiative, which fought to enact the state’s anti-gouging law, said he was “disappointed” by the Supreme Court’s decision. But he argued that the high court’s move “makes it more imperative” that the General Assembly pass legislation this year that would establish a prescription drug affordability board in Maryland.

That bill, sponsored by Sen. Katherine A. Klausmeier (D-Baltimore County) and Del. Joseline Peña-Melnyk (D-Prince George’s), is up for hearings on March 6 in the Senate Finance Committee and the House Health and Government Operations Committee.

Both versions have a robust number of sponsors, suggesting the legislation is poised to pass. Gov. Lawrence J. Hogan Jr. (R) has said he’d like to see the state do something to address the skyrocketing cost of prescription drugs, but he hasn’t endorsed the current legislation specifically.

Asked whether the Supreme Court’s refusal to consider Maryland’s price-gouging case suggests that the prescription drug affordability board could also be subject to legal challenge, DeMarco asserted the circumstances are different. The new proposal, he said, attempts to address “an upward payment,” while the former law was a price control.

In an 11-page advisory letter to Peña-Melnyk dated Jan. 4, Assistant Attorney General Kathryn M. Rowe suggested that an affordability law could survive legal scrutiny, with a few caveats.

“It is my view that the proposed legislation does not violate the Commerce Clause of the United States Constitution,” Rowe wrote. “It is also my view, however, that there is some risk that the proposed legislation could be found to be preempted by reason of conflict with United States Patent law. Moreover, to the extent the proposed legislation would regulate the prices that self-insured plans pay for prescription medications, it could be preempted by the Employee Retirement Income Security Act (“ERISA”).”

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Josh Kurtz
Co-founder and Editor Josh Kurtz is the leading chronicler of Maryland politics and government. He began covering the State House in 1995 for The Gazette newspapers, and has been writing about state and local politics ever since. He later became an editor at Roll Call, the Capitol Hill newspaper, and spent eight years at E&E News, an online subscription-only publisher of news websites covering energy and environmental issues. For seven of those years, he led a staff of 20 reporters at E&E Daily, which covers energy and environmental policy on Capitol Hill and in national politics. For 6 1/2 years he wrote a weekly column on state politics for Center Maryland and has written for several other Maryland publications as well. Kurtz has given speeches and appeared on TV and radio shows about Maryland politics through the years.

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