How States Can Contain Rx Drug Costs without Violating Federal Patent Law

This National Academy for State Health Policy white paper, States’ Rights: A Patent Law Analysis of NASHP Rate-Setting Model Act by experts at the University of California Hastings College of the Law, explores why state drug rate-setting legislation and other cost containment approaches do not violate federal patent law and can withstand legal challenges.

This brief may be useful for state legislators, legislative counsels, and state attorneys general who want to design legislation to be as strong as possible against patent challenges. It will also help state officials who are responding to legal challenges. In 2017, the industry sued every state that passed drug cost containment laws and all claimed violation of federal law.

The drug industry argues that federal patent law allows a patent-protected innovator to achieve unfettered profits through unfettered pricing, and any state that seeks to limit industry profits is violating federal patent rights.

Lawsuits against state governments are heard in federal courts only if there is a claimed breach of constitutional law. Without that claim, these lawsuits go before a state court that may not be sympathetic to industry claims against the state. To date, industry lawsuits have claimed violations of the federal Commerce Clause, freedom of speech, the Takings Clause, and Patent Act. To read the white paper addressing patent law, click here. To read a blog exploring federal patent law and state regulations, click here.

To participate in a webinar featuring the legal experts from the University of California Hastings College of the Law, scheduled for 2:30 to 3:30 p.m. (EST) Thursday, March 29, 2018, click here. This webinar is open to state officials only. Contact Corinne Alberts (calberts@nashp.org) with any questions.

To read a white paper addressing state drug cost containment laws and the federal Commerce Clause, click here.