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States Fight to Control High Drug Prices

On Friday, April 13, 2018, the Fourth Circuit ruled 2-1 that Maryland law HB 631, prohibiting price gouging by generic pharmaceutical companies, is unconstitutional because it violates the dormant commerce clause by directly regulating transactions that occur outside of the state.

The Maryland law prohibites generic drug manufacturers or wholesale distributors from making unconscionable increases to the price of an essential off-patent or generic drug. The Association for Accessible Medicines (AAM), a trade group of generic drug manufacturers, sued the Maryland Attorney General to stop implementation of the law because they said the law violated the dormant commerce clause and the law is impermissibly vague, violating the Fourteenth Amendment Due Process Clause. The Commerce Clause allocates power to the federal government to regulate interstate commerce and constrains states from enacting legislation that interferes with or burdens interstate commerce. The dormant commerce clause limits states from enacting legislation that controls the price of goods outside of the state. The AAM appealed the District Court for the District of Maryland’s decision that granted the State of Maryland’s motion to dismiss AAM’s challenge and denied AAM’s motion for injunctive relief.

The Fourth Circuit found the law unconstitutional because (1) the law is not triggered by conduct that happens inside the state of Maryland, (2) even if it did, the law seeks to control transactions that occur outside of the state, and (3) if other states enacted similar laws, this would impose a significant burden on interstate commerce. The Court did not address whether the statute violated the Fourteenth Amendment because it ruled it unconstitutional under the commerce clause.

Maryland is not the only state working to control high drug prices through legislation. In March of 2018, Oregon passed the Prescription Drug Price Transparency Act, HB 4005. The Oregon law would create new reporting requirements for drug manufacturers related to price increases and patient assistance programs. In 2017, Louisiana, Nevada, California, Maryland, and New York all enacted transparency bills related to drug prices. In 2016, Vermont enacted SB 216 to identify the top fifteen drugs that the state spends the most money on. These states join others that have already put in transparency laws related to prescription drugs like the District of Columbia’s AccessRx law, which requires reporting on gifts to healthcare providers in the District from pharmaceutical companies.

Similar to the Maryland law, laws in other states have been challenged by pharmaceutical and device manufacturer trade groups. The Pharmaceutical Research Manufacturers Association (PhRMA) and Biotechnology Innovation Organization (BIO) have challenged Nevada statute, SB 539, for infringement on patent and trade secrets. The Nevada law requires manufacturers of essential diabetes drugs to report manufacturing costs of the drug, a list of sales representatives who market the drug, payments or donations to nonprofit organization, and other information. In California, PhRMA filed a complaint seeking declaratory and injunctive relief against implementation of SB17, which imposes reporting requirements on pharmaceutical companies for certain price increases on their products sold to state purchasers in California.

The Maryland law was unique because it was the first state law that went beyond reporting and instead explicitly prohibited price increases. The Fourth Circuit decision might scare other state legislatures from passing more aggressive laws to stabilize or lower drug prices. Transparency laws, like the ones passed in 2017, are important because policy makers cannot know there is a problem without the data to examine whether there is one. But there also needs to be more policy action towards potential solutions to keep drug prices down. The Fourth Circuit majority opinion did note that they were sympathetic with consumers who have been affected by high drug prices and that the decision is is not meant to suggest that Maryland and other states cannot enact legislation to secure lower prices for prescription drugs for citizens within their state. Hopefully patient advocacy groups keep pushing for similar state laws and other policy changes to shift the landscape of drug pricing.

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Pharma Transparency Bill Wains in California as Price-Gouging Discussion Gains Momentum Nationally

On August 17, California lawmakers killed a drug price transparency bill, putting to rest a policy that would have major implications on the pharmaceutical industry in the United States’ most populous state. The bill, which was first introduced by State Senator Ed Hernandez (D-West Covina) in February 2016, sought to require drug makers to report and explain any price pharmaceutical increase of ten percent within any given twelve-month period, as well as justify any drug price of at least $10,000 within thirty days of moving to that amount and require insurers to disclose how much money they spent on drugs. While the bill received far-reaching support from healthcare providers, insurers, patient advocacy groups, labor groups, and business groups alike, it was met with fervent opposition by pharmaceutical companies.

According to the Los Angeles Times and lobbying activity filings, Hernandez’s legislation was one of the most lobbied bills of current the session, with at least seventy groups spending  money to advocate for or against it. “It’s probably amongst one of the more heavily lobbied bills — similar to tobacco and the most controversial bills,” the measure’s author, Senator Hernandez, told The Times.  However, by August 17, after four amendments, Hernandez pulled the plug on it entirely, stating that the amendments made it difficult to accomplish the bill’s intention, which would have “shed[] light on the reasons precipitating skyrocketing drug prices.”

The demise of this legislation is another huge win for Big Pharma lobbyist PhRMA, which in October 2015 won a summary judgment ruling in the United States District Court for the District of Columbia, blocking certain hospitals from receiving discounts for pricey orphan drugs. It also comes at a time when pharmaceutical companies, biotech firms, and orphan-drug makers have come under high scrutiny for price gouging, including the 5,455% price increase of HIV and Malaria-treatment medication, Daraprim, from $13.50 to $750 per pill in September 2015. Earlier this month, the uptick of the price of the allergic reaction-treating EpiPen Auto-injector medical device – from $57 to $600 between 2007 and 2016 – as its maker anticipates the arrival of a generic competitor, though, its non-generic, brand name competitor Auvi-Q was recalled in 2015 over dosage concerns.

A proponent for changes to Big Pharma since the 1990s, United States Senate Bernie Sanders (I – VT) made “out of control” prescription drug pricing a key issue during his 2016 presidential campaign. After winning the Democratic nomination, Presidential hopeful Hillary Clinton has carried the torch, speaking out on drastic price increases, sending stocks for EpiPen-maker, Mylan, tumbling.

With little being done by the United States Congress on the issue of drug price transparency, fourteen state legislatures have introduced measures to reign in prices. As of 2016, only Vermont has been successful in passing a bill, while others stall or fail outright, as is the case in California.

The pricing war in California now marches to the ballot in November. Citizens will vote on an initiative that would prohibit state agencies, like Medical (the state’s version of Medicaid) and Medicare from being charged any more for drugs than the United States Department of Veterans’ Affairs.

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Is your state the healthiest state in the US?

According to the United Health Foundation, 26.2% of Americans lead sedentary lives, but premature deaths and death caused by heart disease and cancer have been decreasing for the past twenty years. The report released in conjunction with the American Public Health Association and the Partnership for Prevention found that the healthier a state was, the fewer citizens who had sedentary lifestyles.

The study was done by phone, and determinants included: smoking, binge drinking, obesity, high school graduation rates, sedentary lifestyle, children in poverty, infectious disease cases, air pollution, violent crime, health insurance, immunizations, primary care doctors, hospitalizations, and rate of conditions and deaths, like cancer, heart disease, and diabetes.

So which are the healthiest states?

Vermont leads for the second year in a row.

Mississippi found itself last, tied with Louisiana, and in the same spot as last year.

The list follows:

  1. Vermont
  2. Hawaii
  3. New Hampshire
  4. Massachusetts
  5. Minnesota
  6. Connecticut
  7. New Jersey
  8. Utah
  9. Maine
  10. Rhode Island
  11. Colorado/North Dakota
  12. Oregon/Washington
  13. Nebraska
  14. Wisconsin
  15. Idaho
  16. New York
  17. Maryland
  18. Iowa
  19. Virginia
  20. California
  21. Wyoming
  22. Kansas
  23. Arizona
  24. Pennsylvania
  25. South Dakota
  26. Alaska
  27. Montana
  28. Illinois
  29. Delaware
  30. New Mexico
  31. North Carolina
  32. Florida
  33. Ohio
  34. Georgia
  35. Michigan
  36. Nevada
  37. Tennessee
  38. Texas
  39. Indiana
  40. Missouri
  41. Oklahoma
  42. Kentucky
  43. Alabama
  44. South Carolina
  45. West Virginia
  46. Arkansas
  47. Louisiana/Mississippi

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