Maryland Forges Ahead on Drug Price Transparency

Only weeks after the Supreme Court declined to hear Maryland’s appeal of the 4th Circuit decision striking down the state’s recent drug price transparency law, the Maryland legislature has again resolved to address prescription drug pricing.  Recently cross-filed Senate and House bills in the new legislative session incorporate many of the same reporting requirements underpinning the now invalidated 2017 law, but expand the scope of the reporting requirements to include PBMs and insurance carriers in addition to prescription drug manufacturers.

As a reminder, in April 2018, a panel of the 4th Circuit concluded that Maryland’s 2017 drug price transparency law violated the dormant commerce clause because it directly regulated the price of transactions that occurred outside Maryland.  In reaching that conclusion, the 4th Circuit determined that the 2017 law was not triggered by any conduct that took place in Maryland and, even if it were, the law purported to control the prices of transactions that occurred outside the state.  Fatal for the 2017 law was its application to drugs that were “made available for sale” in Maryland.  That phrase, according to the panel, did not limit the law’s application to sales that actually occurred within Maryland, nor did it restrict the law’s operation to the context of resale transactions with a Maryland consumer.  Indeed, Maryland confirmed at oral argument that the law was intended to reach sales upstream from consumer retail sales.

Like the 2017 law, the pending bills would empower the state to request information from drug manufacturers of prescription drugs on which the state spends “significant health care dollars” and for which the wholesale acquisition cost has increased by a total of 50% or more during the immediately preceding year.  In addition, the bills would require insurance carriers offering health plans within the state to: 1) make public certain pertinent consumer information (such as formulary lists, any prior authorization or step therapy requirements, and cost-sharing for each prescription drug on the formulary); 2) provide to the state information on consumer grievances; and 3) disclose to consumers when they may be subject to “excess cost sharing” for prescription drugs.  Finally, the bills would require PBMs to deliver detailed information on the amount of administrative fees and payments received from prescription drug manufacturers related to pharmacy benefits provided to Maryland enrollees.

It remains to be seen whether either bill, if enacted, would be vulnerable to the same dormant commerce clause challenges that sunk the 2017 law.  Notably absent from both bills is the language from the 2017 law which would have authorized the Maryland AG to restrain or enjoin prescription drug price gouging and recapture money on behalf of consumers.  It remains to be seen whether such an omission will help insulate the legislation from legal challenges if enacted.  We will be sure to follow the bills as they move forward in both chambers.

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