Anti-price gouging: legislation introduced in Senate while Maryland’s appeal is rejected

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Anti-price gouging: legislation introduced in Senate while Maryland’s appeal is rejected

Home/Policies & Legislation | Posted 01/04/2019 0 Post your comment

Under current law in the US, pharmaceutical companies can raise prices of their products without justification. A 2017 Public Citizen survey revealed that only 14% of the world’s top 29 pharmaceutical companies were willing to limit annual price increases to less than 10%. In February 2019, US senators proposed legislation to reduce prescription drug price gouging, while Maryland’s appeal of a ruling that struck down its anti-price gouging regulation was rejected.

US Senators Brown and Gillibrand have announced legislation that would limit annual prescription price increases or cumulative price increases over a 5-year period. This bill, the Stop Price Gouging Act, would:
• require pharmaceutical companies to report increases in drug prices, with justification
• penalize pharmaceutical companies that engage in unjustified price increases, with financial penalties proportionate to the magnitude of the price increase.

Any revenues collected through the Stop Price Gouging Act would be reinvested in drug research and development at the National Institutes of Health.

Brown and Gillibrand introduced this bill last Congress, and said they would continue fighting to pass it this session of Congress. According to academic experts, the Stop Price Gouging Act ‘could fundamentally alter the dynamics of pharmaceutical pricing in the United States and result in initial tax receipts of up to tens of billions of dollars annually’.

This legislative package will also allow the Secretary of Health and Human Services to negotiate drug prices for Medicare beneficiaries, and permit other companies to produce generic versions of medications if the initial company will not negotiate fairly.

Lack of federal action and public outcry over rising prescription drug prices has led several US states to implement their own anti-price gouging measures [1-3]. Following a series of high-profile price hikes, the Maryland General Assembly enacted a law in 2017 which prohibited "unconscionable" increases in prices of essential off-patent medicines [4]. However, it was nullified in April 2018 when an appeals court ruled that Maryland had regulated wholesale pricing, in violation of the US Constitution’s ban on state-level regulation of interstate commerce. In February 2019, the US Supreme Court rejected Maryland’s appeal of this appeals court ruling.

References
1. GaBI Online - Generics and Biosimilars Initiative. Escalating prices of generic drugs in the US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Apr 1]. Available from: www.gabionline.net/Generics/Research/Escalating-prices-of-generic-drugs-in-the-US
2. GaBI Online - Generics and Biosimilars Initiative. Oregon introduces pricing transparency bill [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Apr 1]. Available from: www.gabionline.net/Policies-Legislation/Oregon-introduces-pricing-transparency-bill
3. GaBI Online - Generics and Biosimilars Initiative. US states progress drug-pricing legislation [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Apr 1]. Available from: www.gabionline.net/Policies-Legislation/US-states-progress-drug-pricing-legislation
4. GaBI Online - Generics and Biosimilars Initiative. Maryland has increased power over drug prices [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Apr 1]. Available from: www.gabionline.net/Policies-Legislation/Maryland-has-increased-power-over-drug-prices

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