With Hogan’s Signature, Bill Would Let Attorney General Fine Price-Gouging Drug Companies

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This year, Maryland became the first Republican-led state to ban energy firms from drilling for natural gas. Another bill that now sits on Gov. Larry Hogan’s desk would make Maryland the first to target another industry known for a controversial practice.

During the final hours of the General Assembly session today, the House of Delegates overwhelmingly approved a measure that would allow the state’s top prosecutor to impose a hefty fine on companies that suddenly ramp up the price of a generic prescription drug simply to generate more profits.

The language in the bill says the maker of a generic drug that makes an “unconscionable increase,” or one that’s unjustified by production costs and targets patients without “meaningful choice” to find an alternative option other than buying the marked-up drug, could be subject to a civil penalty of up to $10,000.

This fine could come after the attorney general, with his or her new powers, inquires with the company about the price hike and asks for documentation to substantiate the increase. The state’s Medicaid program would be entrusted with notifying the attorney general about any generic drug price hikes.

If Hogan signs it, Maryland would be the first state to grant its attorney general to prosecute drug companies.

“Price gouging,” as it’s known, has been going on for years, but gained hysterical national attention in 2015 with Turing Pharmaceuticals and noted bad guy Martin Shkreli decided to raise the price of a prescription drug called Daraprim, used to treat toxoplasmosis in AIDS patients, from $13.50 to $750 per pill. Shkreli was eventually called to testify before Congress (where he was a jerk to elected officials) and later jailed on unrelated charges.

Another company notably began offering a cheaper, generic version of that drug after the whole fiasco. This bill would target greedy actions by companies that make generic medications, be them at direct expense to patients, their private health insurers or Medicaid programs.

Attorney General Brian Frosh seemed motivated by the decision. “We’ve seen price gouging in the drug industry for a number of years now,” he told Fox45’s John Rydell. “It’s gotten terrible, it’s gotten to the point where people are making a decision about whether or not to pay their rent or to take their medicine.”

Baltimore Health Commissioner Leana Wen, a certified emergency physician, commended the vote by lawmakers in a statement. She pointed out that naloxone, the life-saving generic medication that she’s promoted to reduce overdose deaths in Baltimore, has more than doubled in recent years. This has limited the availability of the so-called miracle drug, she said.

“This legislation marks a significant step in making health care more affordable for Maryland families and continues our state’s tradition of being on the forefront of improving health and wellness,” Wen said in her statement. “We thank the sponsors for supporting this important legislation, and encourage the Governor’s swift signature to make House Bill 631 into law.”

The governor hasn’t indicated whether he plans to sign the bill, but with overwhelming approval in both houses of the General Assembly, lawmakers likely wound’t face much resistance in overriding a veto.

Ethan McLeod
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