A federal appeals court on Friday declared unconstitutional a Maryland law enacted last year that lets the state attorney general sue generic drugmakers who sharply raise prices on medicines.
The 4th U.S. Circuit Court of Appeals sided with the main trade group for generic pharmaceutical companies in holding that the state law violated the U.S. Constitution by regulating the price of transactions that occur outside of Maryland.
“To be clear, we in no way mean to suggest that Maryland and other states cannot enact legislation meant to secure lower prescription drug prices for their citizens,” U.S. Circuit Judge Stephanie Thacker wrote for the 2-1 majority.
But Thacker wrote that while drug manufacturers are by no means entitled to engage in abusive pricing practices, the law violated had the so-called dormant commerce clause of the Constitution by regulating prices charged for medications outside the state.
Hefty Fines For Violations
A spokeswoman for Maryland Attorney General Brian Frosh had no immediate comment. The Association for Accessible Medicines, the trade group that filed the lawsuit, did not immediately respond to a request for comment.
The group, which represents companies such as Teva Pharmaceutical Industries Ltd and Mylan NV and which was formerly known as the Generic Pharmaceutical Association, filed the lawsuit in July, arguing the law was unconstitutional.
The measure was passed by Maryland’s Democratic-controlled legislature in April amid concerns about rising U.S. drug costs. Governor Larry Hogan, a Republican, said in May that he would allow it to take effect without his signature.
The state law had imposed fines of up to $10,000 for violations and had allowed Frosh to require a manufacturer or distributor to show its records and justify a price increase.