- Home
- HEALTH COSTS AND VALUE
- PRESCRIPTION DRUG PRICING
- Legal Resources
Legal Resources
This resource library features Legal Analyses written by NASHP experts that address issues raised by the pharmaceutical industry. Also included are State Legal Filings that provide summaries and links to state documents that defend their drug cost containment actions in federal court.
Below are links to pertinent state legal documents filed in response to industry challenges of drug cost containment legislation. This is not a comprehensive list, however it provides information about what arguments states are making to defend their legislation.
NASHP Legal Analysis
International Reference Rates Analysis
NASHP’s Proposal for State-Based International Reference Pricing for Prescription Drugs, August 2020. This white paper by Rachel Sachs, JD, MPH, describes the international reference rate-setting proposal, considers key design choices, articulates and responds to potential legal challenges, and provides guidance on several potential implementation issues. Learn more about NASHP’s International Reference Rates model.
Unsupported Price Increases Analysis
NASHP’s Proposal for Imposing Penalties on Excessive Price Increases for Prescription Drugs, June, 2020. This analysis by Michelle Mello, JD, PhD, and Stacie B. Dusetzina, PhD, provides a roadmap for states that want to design legislation to regulate excessive price increases, and offers recommendations for avoiding legal challenges. An accompanying chart, highlights how NASHP’s model legislation addresses recommendations from this analysis. Learn more about NASHP’s Unsupported Price Increases model.
Analyses of Legal Challenges to State Efforts to Control Drug Prices
States have passed an unprecedented number of laws addressing drug prices over the past few years and some have faced legal challenges. This NASHP legal brief, Navigating Legal Challenges to State Efforts to Control Drug Prices: PBM Regulation, Price Gouging, and Price Transparency, by Katherine L. Gudiksen, PhD, Samuel M. Chang, JD, and Jaime S. King, JD, PhD, explores those challenges. The brief analyzes the arguments industry groups have made against pharmacy benefit manager regulations, anti-price-gouging laws, and drug price transparency requirements using the Dormant Commerce Clause and federal patent and trade secret laws.
Patent Law Analysis
This brief by Robin Feldman, Betty Chang Rowe, Rabiah Oral, Amy Y. Gu, and Katherine Gudiksen provides a Patent Law Analysis of NASHP Rate-Setting Model Act.
NASHP’s blog to learn more about Patent Law Analysis and drug cost regulation.
A Glossary of Pharmaceutical Terms
The terms used to describe different classes of drugs, the various players in the pharmaceutical industry, and drug approval and marketing can be complicated. NASHP’s easy-to-use glossary explains these complex references.
State Legal Filings
AR SB 688/Act 900 – Rutledge vs. Pharmaceutical Care Management Association
The Pharmaceutical Care Management Association (PCMA) filed suit against a 2015 Arkansas law that ties reimbursement rates paid to pharmacies by pharmacy benefit managers (PBMs) to pharmacy acquisition cost. The U.S. Court of Appeals for the Eighth Circuit ruled that the law was preempted by the Employee Retirement Income Security Act (ERISA) of 1974. In December 2020, the U.S. Supreme Court ruled that ERISA did not preempt the Arkansas legislation, finding that the statute was primarily directed at cost regulation. In 2021, the Court reaffirmed this decision in a substantively similar case arising from a different Eighth Circuit opinion — Pharm. Care Mgmt. Ass’n v. Tufte (2020).
Filings:
- Supreme Court reverses Eighth Circuit, finds ERISA does not preempt Arkansas legislation
- NASHP blog: In Major Victory for States, Supreme Court Clears the Way for State Health Reform, December 2020
- U.S. Court of Appeals for the Eighth Circuit decision that found that ERISA pre-empted Arkansas’ law regulating PBMs 6/8/2018
- Arkansas Attorney General’s request that the U.S. Supreme Court review the Eighth Circuit ruling 10/22/2018
- Brief of petitioner Leslie Rutledge 2/24/2020
- Brief of respondent Pharmaceutical Care Management Association 3/25/2020
- Complete Supreme Court docket
Amicus Briefs:
- National Association of Chain Drug Stores, in support of Arkansas 3/2/2020
- States and the District of Columbia, in support of Arkansas 3/2/2020
- Solicitor General, in support of Arkansas 3/2/2020
- Retail trade associations, in support of Arkansas 3/2/2020
CA SB 17 – Pharmaceutical Research and Manufacturers of America vs. David
Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit against a 2017 California law (CA SB 17) that requires pharmaceutical manufacturers to report price increases that meet specified thresholds for drugs sold in the state and to provide a 60-day notice of certain price increases to public and private payers. PhRMA’s complaint claims the law violates the Dormant Commerce Clause (DCC) by regulating interstate commerce, the First Amendment by compelling speech, and the Fourteenth Amendment’s Due Process Clause because it is impermissibly vague.In January 2021, the US District Court for the Eastern District of California rejected both PhRMA’s DCC and First Amendment claims, denying PhRMA’s request for a summary judgement.
Filings:
- NASHP blog: District Court Judge Upholds California’s Rx Transparency Law, Adding Another Win for States, January 2021
- PhRMA’s initial complaint 12/8/2017
- California’s motion to dismiss PhRMA’s lawsuit 1/26/2018
- PhRMA’s response to California’s motion to dismiss 2/26/2018
- U.S. District Court’s decision dismissing PhRMA’s lawsuit 8/30/2018
- PhRMA’s refiled, amended lawsuit that includes additional information demonstrating harm to PhRMA members from CA SB 17 9/28/2018
- U.S. District Court’s decision allowing PhRMA’s amended lawsuit 7/30/2019
- U.S. District Court’s decision upholding California’s transparency law 1/4/2021
CA SB 17 – Amgen, Inc. vs. The California Correctional Health Care Services
Amgen filed suit against California Correctional Health Care Services (CCHCS) to block the release of advance notice of drug price increases per a public record request.
California SB 17 requires drug manufacturers to submit a notice to public and private payers 60 days before a drug price increase that surpasses a specified threshold. In 2018, Amgen submitted a notice of pending drug price increases to purchasers registered with the state, including CCHCS. CCHCS later notified Amgen that it planned to release the information to a reporter in response to a California Public Records Act request. Though Amgen obtained a preliminary injunction, CCHCS challenged the ruling, and the injunction was later lifted by the California Court of Appeal, allowing CCHCS to share the information.
Filings:
- Superior Court of Los Angeles’ order granting Amgen’s motion for a preliminary injunction 2/1/2019
- CCHCS’s brief appealing the preliminary injunction 5/27/2019
- California Court of Appeal’s decision reversing the lower court’s order 4/9/2020
Other Resources:
- NASHP blog: Court Rules California Can Share Advance Notice of Rx Price Hikes, April 2020
OR HB 4005 and HB 2658 – Pharmaceutical Research and Manufacturers of America v. Savage
The Pharmaceutical Research and Manufacturers of America (PhRMA) challenged two Oregon drug cost transparency laws. HB 4005 requires drug manufacturers to submit pricing information for drugs whose prices increase above a certain threshold, and HB 2658 requires manufacturer to report specified price increases to the state at least 60 days before they take effect.
PhRMA argues the laws violate the Dormant Commerce Clause by restricting drug prices nationwide, the First Amendment by compelling speech, and the Fifth Amendment Takings Clause. PhRMA also claims the laws are preempted by the Defend Trade Secrets Act.
Filings
- PhRMA’s Initial Complaint 12/9/19
NV SB 539 – Pharmaceutical Research and Manufacturers of America and Biotechnology Innovation Organization vs. Sandoval and Whitley
Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovations Organization (BIO) challenged Nevada SB 539 that requires manufacturers and pharmacy benefit managers to report pricing information for essential diabetes medications. PhRMA and BIO argued that the law was pre-empted by federal patent law and the Defend Trade Secrets Act and that it violated the Fifth Amendment Takings Clause and the Dormant Commerce Clause.
The associations dropped the lawsuit in June 2018 after Nevada’s Department of Health and Human Services adopted regulations that allow manufacturers and pharmacy benefit managers to request that specific price report information be kept confidential.
Filings:
- PhRMA and BIO’s initial complaint 9/1/2017
- PhRMA and BIO’s request for an immediate injunction 9/13/2017
- U.S. District Court District of Nevada ruling denying the manufactures’ request for an injunction 10/17/2017
- Nevada Department of Health and Human Services implementing regulations 5/31/2018
- Joint status report that ended the lawsuit 6/28/2018
CA AB 824 – Association for Accessible Medicines vs. Becerra
CA AB 824 established that if a generic manufacturer receives anything of value from a brand-name drug manufacturer that has sued for patent infringement, such “pay-for-delay” agreements are anticompetitive – unless a company can prove otherwise. The Association for Accessible Medicines (AAM) claims the California’s pay-for-delay law violates the Dormant Commerce Clause, prohibitions on excessive fines, due process and federal patent law.
In December 2019, the U.S. District Court for the Eastern District of California denied AAM’s request for a preliminary injunction. AAM then appealed to the Ninth Circuit Court of Appeals, which recommended the District Court dismiss the case because AAM did not establish standing. The District Court dismissed the case, in line with the Ninth Circuit’s recommendation. In August 2020, AAM refiled its complaint with the U.S. District Court, including additional evidence in an attempt to establish standing. The District Court granted AAM’s motion for a preliminary injunction in December 2021. In February 2022, however, the federal District Court modified the injunction to permit California to enforce only those “provisions of AB 824 with respect to settlement agreements negotiated, completed, or entered into within California’s borders.” The District Court reasoned this would avoid DCC concerns since these agreements only “regulate conduct occurring wholly within California’s borders.” The modified preliminary injunction will remain in effect as the parties prepare for trial, unless the court further amends its order.
Filings:
- U.S. District Court (E.D. Cal.) modifies preliminary injunction to enforce provisions against wholly California-based settlement agreements
- AAM’s initial complaint 11/12/19
- U.S. District Court Eastern District of California’s dismissal of AAM’s motion for a preliminary injunction 12/31/19
- AAM’s notice of appeal in the U.S. Court of Appeals for the Ninth Circuit 1/2/20
- California’s opposition to AAM’s motion for injunction pending appeal 1/6/20
- Ninth Circuit Court of Appeals decision vacating the case, 7/24/2020
- AAM’s refiled lawsuit in the U.S. District Court Eastern District of California, 8/25/20
- U.S. District Court Eastern District of California’s decision granting AAM a preliminary injunction 12/9/21
MN HF 3100 – Pharmaceutical Research and Manufacturers of America vs. Williams et al
Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit against the members of the Board of Pharmacy and the Board of MNSure to stop the implementation of a law that requires insulin manufacturers to make insulin available to eligible individuals who are in urgent need of affordable insulin. PhRMA argues that HF 3100 violates the Fifth Amendment Takings Clause because it requires manufacturers to provide insulin for a certain price. In March 2021, the U.S. District Court of Minnesota dismissed the lawsuit, ruling that there had been no “taking” when the case was filed, and that PhRMA would have to show that they had sought compensation for the alleged taking and had been unsuccessful. PhRMA appealed the District Court’s ruling to the Eighth Circuit, arguing before a three-judge panel in December 2021.
Filings:
- PhRMA’s initial complaint 6/30/20
- Board of Pharmacy and Board of MNSure’s motion to dismiss PhRMA’s lawsuit 8/27/2020
- United State District Court of Minnesota’s dismissal of PhRMA’s lawsuit 3/15/21
MD HB 631: Association for Accessible Medicines vs. Frosh
The Association for Accessible Medicines (AAM) filed a lawsuit challenging Maryland’s anti-price-gouging law in U.S. District Court for the District of Maryland. AAM argued that the law violated the Dormant Commerce Clause (DCC) by regulating commerce outside the state and that it was impermissibly vague. The District Court for Maryland dismissed most of AAM’s suit, but AAM appealed and the Fourth Circuit Court of Appeals overturned the District Court’s decision, ruling that the law violated the DCC. The US Supreme Court rejected the attorney general’s request to review the Fourth Circuit’s decision.
Filings:
- AAM’s Initial Complaint 7/6/2017
- Maryland’s Motion to Dismiss 8/14/2017
- Maryland’s Filing Opposing AAM’s Motion for an immediate preliminary injunction 8/15/2017
- U.S. District Court’s decision dismissing most of PhRMA’s lawsuit 9/29/2017
- AAM’s Appeal to the Fourth Circuit Court of Appeals 10/12/2017
- U.S. Court of Appeals for the Fourth Circuit’s Decision striking down the law 4/13/2018
- Maryland Attorney General’s request that the U.S. Supreme Court review the Fourth Circuit decision 10/2018
Minnesota Statues 2023, Ch 57, art 1, s 23: Association for Accessible Medicines vs. Ellison
The Association for Accessible Medicines (AAM) filed a lawsuit challenging Minnesota’s anti-price-gouging law in U.S. District Court for the District of Minnesota.
AAM argued that the law violated the Commerce Clause of the U.S. Constitution, the Due Process Clause of the Fourteenth Amendment, and transgressed “the horizontal separation of powers” embedded in the U.S. Constitution by regulating commerce outside of Minnesota. AAM requested that the Court declare that the Act violates the U.S Constitution and is thus void and unenforceable. In addition, AAM has requested that the Court issue both a preliminary and a permanent injunction to prohibit Minnesota from enforcing the Act.
In response, the Minnesota Attorney General’s Office argued that AAM’s claims are invalid, citing several cases including the Supreme Court’s recent decision in National Pork Producers Council v. Ross, 143 S. Ct. 1142 (2023). The Minnesota Attorney General’s Office has requested that the Court deny AAM’s motion for a preliminary injunction and dismiss the complaint with prejudice.
Filings:
- AAM Initial Complaint 7/5/2023
- Minnesota’s Motion to Dismiss and Filing Opposing AAM’s Motion for an immediate preliminary injunction 7/31/2023