The Maine Legislature recently passed LD 1117, a bill that would prohibit excessive rises in generic and off-patent prescription drugs sold in the state. It would also allow the attorney general to take action against any drug manufacturers that violated the bill’s provisions.
The bill, which was sponsored by Sen. Troy Jackson (D-Aroostook) and received only three votes from Republicans in the Senate, requires Gov. Janet Mills’ signature to become law. Mills has not publicly said whether she intends to sign the measure.
The bill prohibits drug manufacturers from imposing “excessive price increases”, either directly or indirectly, through a whole distributor, pharmacy or other intermediary for the sale of any generic or off-patent prescription drug sold, dispensed or delivered to Maine residents.
The bill defines excessive price increases as anything in excess of 20% of the wholesale acquisition cost per pricing unit of the preceding calendar year for drugs that cost at least $10 per price unit.
Price increases are allowed under the bill if they can be directly attributed to additional costs for the drugs imposed on the distributor by the manufacturer of the drug.
The bill further requires that any seller, deliverer or distributor of generic or off-patent prescription drugs maintain a registered agent in the state.
Violations of the law are reported to the attorney general by the Maine Health Data Organization. The attorney general is then required to notify the offending prescription drug manufacturer that they have been identified as excessively raising drug prices.
Following an action brought by the attorney general, the Superior Court can issue an order to compel the drug manufacturer to produce records relevant to determining whether a violation of the law has occurred. The Court can also require prices be restored to comply with the law, require the offending drug manufacturer to account for all revenue generated by a violation of the law to the attorney general, and restore money acquired by excessive price increases to the consumer.
If the manufacturer is unable to identify individual transactions that require money to be returned, all revenue generated by violations of the law would be remitted to the state and used to reduce the cost of acquiring prescription drugs.
The law would assess a civil penalty of up to $30,000 per day for each violation. According to LD 1117, every individual transaction that violates the law is a separate violation. Drug manufacturers who violate the law would also be responsible for providing other appropriate relief, including attorney’s fees and the cost for the attorney general to bring an action against them.
The law also makes it illegal for drug manufacturers to pull a generic or off-patent prescription drug for sale in order to avoid the prohibition on excessive price increases. Drug manufacturers notify the attorney general 180 days before they intend to pull a drug from the market. Failure to do so would result in the attorney general bringing an action before the Superior Court, which the law instructs to assess a civil penalty of not less than $500,000. The fiscal note attached to LD 1117 by the legislature expects this fine will increase revenue to the General Fund.
Mills has not publicly announced whether she will sign the bill. Her office did not return a request for comment.
Mills has supported prescription drug reform in the past. In June 2019, she signed into law a package of four bills that she and the Democratic leaders who sponsored them claimed would make prescription medication more affordable and accessible, and would hold “pharmaceutical companies and corporate middlemen accountable.”
The legislation created a wholesale prescription drug importation program, which was approved by the U.S. Department of Health and Human Services. It also created a Prescription Drug Affordability Board, which was created to determine prescription drug spending targets for public entities and to offer methods, such as bulk purchasing, for lowering costs. Another measure in the package aimed to gather information about the price of drugs along the entire supply chain. The final measure required pharmacy benefit managers to pass rebates paid by manufacturers to consumers or health plans.
Given her past support for government measures that control prescription drug companies’ ability to set prices, it seems likely Mills politically supports LD 1117.
Whether or not she vetoes the bill will likely come down to claims the bill is unconstitutional.
The Association For Accessible Medicines (AAM) has called on Mills to veto the bill on the grounds it violates the Constitution’s Dormant Commerce Clause
The Commerce Clause, found in Article I, Section 8, Clause 3 of the Constitution, gives Congress the power to “regulate Commerce with foreign Nations and among the several States”. This implies that states cannot pass legislation that discriminates against interstate commerce or puts excessive burdens on interstate commerce. This implied prohibition on states restricting interstate commerce is known as the Dormant Commerce Clause.
The AAM claims LD 1117 violates the Dormant Commerce Clause because it “necessarily requires out-of-state wholesale transactions between manufacturers and distributors to be conducted in accordance with Maine law.”
The governor’s office did not return a request for comment on whether Mills believes LD 1117 violates the Constitution.
The AAM was the plaintiff in a lawsuit targeting a similar law passed in Maryland, which targeted generic prescription drug price gouging. It was struck down as unconstitutional by the United States Court of Appeals for the Fourth Circuit because it regulated the price of drugs outside of Maryland, in violation of the Dormant Commerce Clause.
The AAM also opposes LD 1117 on the grounds that it needlessly targets already-low prescription drug prices. According to the group, the introduction of generic medicines into prescription drug markets lowers the cost without any intervention from the government. They point to the Maine Health Data Organization, which reports that the 25 most expensive medications in the state are brand-name drugs, to support this argument.
The data also show that, between June 1, 2019 and June 30, 2020, the 25 drugs with the top year-over-year cost increase are all brand-name drugs. For data collected in the same time period, 17 of the top 25 most prescribed brands were generic and eight were brand names.
Of the most frequently prescribed brand-name drugs, Eliquis was the most expensive, with a prescription costing $790. The most expensive of the most-frequently prescribed generic drugs was Albuterol Sulfate Hfa, a generic brand of bronchodilator, a prescription for which costs $67.
