A federal appeals court has ruled that a Maryland state law to combat drug price gouging is unconstitutional.
The decision Friday deals a major blow to Maryland’s effort to reduce high drug prices. The law passed last year prohibits price gouging for the sale of certain generic or off-patent drugs.
The law garnered a legal challenge from the generic drug industry. The industry argued that manufacturers typically sell their products to wholesale distributors that aren’t based in Maryland and the vast majority of sales occur outside of Maryland’s borders.
The industry argued in its lawsuit that the law violates the Constitution’s commerce clause that says only Congress can regulate interstate commerce. Maryland countered that the law applies to drugs made available for sale within the state.
A lower court sided with Maryland last October. However, the U.S. Court of Appeals for the 4th Circuit sided with the generic drug industry that the law violates the clause and was constitutionally vague.
“Although we sympathize with the consumers affected by the prescription drug manufacturers’ conduct and with Maryland’s efforts to curtail prescription drug price gouging, we are constrained to apply the dormant commerce clause to the Act,” the order striking down the law read.
The Association for Accessible Medicines, the generic drug lobbying group that fought the law, praised the decision.
“As AAM has always maintained, this law, and any others modeled from it, would harm patients because the law would reduce generic drug competition and choice, thus resulting in an overall increase in drug costs due to increased reliance upon more-costly branded medications,” AAM President and CEO Chip Davis said in a statement.
Maryland Attorney General Brian Frosh said he was disappointed by the decision.
“We are evaluating all options with regard to next steps,” he said in a statement. “We remain committed to pursuing efforts to eliminate price gouging and to safeguarding Marylanders’ access to prescription drugs.”
