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Maryland Drug-Pricing Law Overturned

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By William Vogeler, Esq. on April 18, 2018 6:57 AM

Lawrence Hogan, Jr. is not a lawyer, but he knows a bad law when he sees one.

Hogan, the rare Republican governor of Maryland, told state legislators that he would not sign their bill because it was unconstitutional. It became law without his signature, but that was not the end of it.

The end came two years later when the U.S. Fourth Circuit Court of Appeals struck the law against price-gouging sales of prescription drugs. It's unconstitutional, the appeals court said.

Commerce Clause

In Association for Accessible Medicines v. Frosh, the appellate panel said the law violated the Commerce Clause. Legislators sought to prevent price-gouging, but they went too far.

The bill targeted drugs that are "made available for sale" in Maryland. The Fourth Circuit had a problem with that language.

"This 'made available for sale' language does not limit the Act's application to sales that actually occur within Maryland, nor does it restrict the Act's operation to the context of a resale transaction with a Maryland consumer," Judge Stephanie Thacker wrote for the majority.

Judge James Wynn dissented, saying the offending language was ambiguous enough not to offend the Constitution. He said it could be interpreted as applying "only to those specific unconscionably priced pills that are sold or resold in Maryland."

Governor's Opinion

Maryland Attorney General Brian Frosh, who represented the state, said in a statement that he was disappointed and considering legal options in the case. He did not say he would confer with the governor.

But the governor knew what he was talking about when he declined to sign the legislation. He pointed out the same problem the appeals court identified.

Hogan is only the second Republican governor to serve in Maryland in the past 50 years. A former businessman, he has wrestled with Democrat-controlled legislature since his election in 2015.

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