Maryland Legislature Passes Clampdown on Prescription Drug Costs

Published June 3, 2019

House Bill 768 and its counterpart, Senate Bill 759, call for establishing a panel with authority to review prices and set caps on prices of drugs exceeding $30,000 for a single course of treatment or within a year’s time. 

Lawmakers scaled back the bill from the original version to limit the board’s authority to public health plans only.

Maryland would be the first state in the nation to create such a panel. The governor has until the end of May to sign the bill, veto it, or allow it to become law without his signature.

Availability Questions

The pricing board could reduce drug availability, says David Hyman, M.D., a Georgetown University Law Center professor, adjunct scholar at the Cato Institute, and coauthor of Overcharged–Why Americans Pay Too Much for Health Care.

“For state employees, they have a right to say, ‘This is what we’re going to cover, and this is what we’re not,’ and that is not unreasonable because they’re footing the bill,” said Hyman. “Medicaid is a different kind of problem. The cost is shared with the federal government, and it involves a population that is not set up to fend for itself in this context. Drug companies can refuse to sell a product for a lower price.”

State Medicaid programs have used other measures to control drug costs, such as limiting patients to a certain number of prescriptions per month. Much of the variability of drug prices is made possible because third parties, not consumers directly, foot the bill, Hyman says.

“If these were individuals making the decisions, we’d have no difficulty how they decide,” said Hyman. “When you’re deciding what car to buy, you get to set the ceiling, and when it doesn’t meet your parameters, you don’t buy the car. Nobody thinks there is anything problematic about it.”

The current legislation is not Maryland’s first attempt trying to control drug prices. In 2017, state lawmakers gave the state’s attorney general power to review and regulate prices of generic drugs. The Association for Affordable Medicine (AAM) challenged the law in court, arguing the law violated the Dormant Commerce Clause of the U.S. Constitution. The U.S. Court of Appeals for the Fourth Circuit sided with AAM, and the U.S. Supreme Court declined the take up the case, thus invalidating the law.

AnneMarie Schieber([email protected])is managing editor of Health Care News.