Maryland Seeks SCOTUS’s Review of Fourth Circuit’s Decision Striking Down Maryland’s Drug Price Gouging Law

For the petition for writ of certiorari, click here.

The Law prohibits “unconscionable increases” in the price of any “essential off-patent or generic drug.” The Arent Fox Health Care Team summarized the Law’s requirements in a June 9, 2017 Alert.

In July 2017, the Association for Accessible Medicines (AAM) sued Maryland, arguing that the Law violated the dormant Commerce Clause and was unconstitutionally vague. The United States District Court for the District of Maryland granted Maryland’s motion to dismiss AAM’s suit as to the dormant Commerce Clause and refused to enjoin enforcement of the Law. In April 2018, however, the United States Court of Appeals for the Fourth Circuit struck down the Law as unconstitutional. Specifically, the Fourth Circuit found that the Law violated the dormant Commerce Clause, because it:

• is not triggered by any conduct that takes place in-state;
• controls the price of transactions that occur out-of-state; and
• would impose a significant burden on interstate commerce if it was similarly enacted by other states.

The Arent Fox Health Care Team covered the Fourth Circuit’s decision in an April 20, 2018 Alert.

In its most recent petition to the SCOTUS, the Maryland AG argued that the Fourth Circuit erred in extending the dormant Commerce Clause’s extraterritoriality doctrine to prohibit state consumer protection laws, and that the extraterritoriality doctrine is limited to cases of economic protectionism. The Maryland AG further characterized the Fourth Circuit’s decision as an “unjustified expansion of [SCOTUS’s] extraterritoriality holdings” that impedes Maryland’s lawful sovereign powers to prevent harm to its citizens merely because the source of the harm occurs out-of-state. The Maryland AG also argued that the Fourth Circuit departed from other circuits’ – specifically the Ninth and Tenth Circuits’ – interpretation of the extraterritoriality doctrine.

Maryland’s drug price gouging Law and the legal challenges against it are of particular importance to the pharmaceutical industry, because other state legislatures are considering enacting similar laws modeled after Maryland’s. Arent Fox will continue to monitor this case and provide updates on the legal issues surrounding states’ efforts to control drug pricing.