As the number of state bills to rein in prescription drug prices grows beyond 150 nationwide in 2018, the first generation of several state laws passed last year are now before the courts. The pharmaceutical industry has consistently challenged drug cost transparency and price gouging legislation passed in 2017 in federal courts. How well these state laws weather their legal challenges will determine how states shape their drug cost containment legislation in 2018 and beyond. Read more.
New state laws designed to control the costs of brand-name and generic prescription drugs often face legal challenges from the pharmaceutical industry. These lawsuits can vary depending on the individual state law, but recent industry lawsuits analyzed by the National Academy for State Health Policy (NASHP) share a common legal thread – drug manufacturers and their trade organizations contend these new state laws violate the federal Dormant Commerce Clause (DCC) case law.
The Constitution’s Interstate Commerce Clause gives Congress the authority to regulate commerce between states, and industry lawsuits have created a body of federal case law that guides what states may and may not do to interstate commerce. Essentially, federal case law has created DCC to make sure states don’t create policies that have the unintended consequence of hindering, affecting, or shaping industry business practices in other states, or that “unduly burden” the multi-state operations of national businesses. This issue – the extent to which a state law or policy can impinge on federal interstate commerce authority – has been shaped by years of federal court cases.
The pharmaceutical industry has used DCC as one way to challenge recent state laws that attempt to eradicate price gouging or bring more transparency to how the industry establishes drug prices. Here are two examples of legislation that pharmaceutical trade groups are now challenging:
- Maryland’s anti-price gouging law: Earlier this year, Maryland became the first state to enact a law protecting consumers from generic prescription drug price-gouging. The law, which went into effect Oct. 1, 2017, prevents manufacturers of generic and off-patent drugs from price gouging or imposing “excessive and not justified” increases in drug prices.
In July, the Association for Accessible Medicines, the trade association that represents generic and biosimilar drugs, filed a lawsuit charging that the law was unconstitutional.
- Nevada’s drug transparency law: Among other provisions, a new Nevada law aims to bring transparency to diabetes drug pricing by forcing manufacturers to provide information about the costs of manufacturing and marketing diabetes drugs, including company’s profits. Two pharmaceutical industry trade groups have filed a lawsuit to block the recently-enacted law, arguing it is unconstitutional.
In the cases of both Maryland and Nevada, the industry has alleged that these laws have ripple effects impacting how the industry conducts business in other states. A judge has already ruled against the industry’s DCC complaint in Maryland. The Maryland Attorney General’s response to the industry lawsuit is an important read for any state policymaker concerned about the industry’s potential legal challenges.
The Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization filed a lawsuit against Nevada’s law in September, arguing the new law is preempted by federal statute and is unconstitutional. While the final outcome of the various legal aspects of the court challenges in Nevada and Maryland are not known yet, the decisions will shape how states approach drug cost control policies.
In the meantime, NASHP believes states can craft strong and effective drug cost regulations that have good potential to avoid an industry challenge based on the DCC. There may, however, be other legal challenges to these laws, even if DCC is not invoked in the legal challenges.
NASHP’s white paper by Anna Zaret and Darien Shanske provides insight and analysis to explain the issues in DCC case law that will help states craft policy that avoids running afoul of existing DCC case law. In addition to the paper, NASHP has a table featuring policy guidelines (see below) that state policymakers can consider as they develop drug cost policies.
NASHP also has a longer DCC research document available to state officials only upon request. For a copy of that DCC white paper, please contact Jennifer Reck.
Earlier this year, Massachusetts Governor Charlie Baker discussed his state’s opioid epidemic during his State of the Commonwealth Address. Less than two months later, on March 14, he signed omnibus legislation designed to tackle the epidemic head-on.
Chapter 52 of the Acts of 2016 contains a wide range of provisions, however one specific provision is making headlines: a seven-day limitation on first-time opioid prescriptions (Note: There are exclusions for pain associated with a cancer diagnoses and for individuals receiving palliative care). The final language reflects a compromise between the Governor, the House, and the Senate. Governor Baker’s original bill limited first-time opioid prescriptions to three days, which the House amended to seven days. In the Senate version, there was no cap; rather, they introduced language requiring that pharmacists only dispense the amount requested by a patient, up to the full amount prescribed. The final bill includes both the House’s seven-day limit on first-time prescriptions as well as modified version of the Senate’s language authorizing partial-fills. Interestingly, the Massachusetts Hospital Association recommends no more than a five-day course for acute pain seen in emergency departments.
In addition to the seven-day cap, the Massachusetts law:
- Requires the state’s boards of professional licensure to develop standards for pain management training programs that will be required to obtain or renew professional licenses;
- Requires providers to consult the state’s prescription monitoring program before writing any schedule II or III prescription narcotic (most opioids);
- Requires emergency departments to, within 24 hours of providing services, conduct a substance abuse evaluation on any person believed to be experiencing an opioid overdose, including individuals who have been administered naloxone;
- Provides liability protections to individuals attempting to provide emergency care by administering naloxone or any other opioid antagonist to reverse the effects of an opioid overdose; and
- Requires schools to verbally screen pupils for substance use disorders at two different grade levels (to be determined by the Department of Elementary and Secondary Education, in consultation with the Department of Public Health).
Notably, Gov. Baker’s controversial proposal to expand certain providers’ authority to involuntarily hold and evaluate individuals for up to 72 hours did not make the final bill.
Massachusetts is not the only state pursuing stronger limitations on opioid pain medications. Maine Governor Paul LePage recently filed legislation that would limit opioid prescriptions to a 15-day supply for chronic pain and a three-day supply for acute pain. A second bill filed in the Maine Senate this week would instead require the state’s licensing boards to review the limitations for MaineCare enrollees (passed in 2012) to determine whether the policies should be expanded beyond the state’s Medicaid program.
Other states’ efforts to reduce opioid misuse and abuse have been successful in reducing overdose deaths. In 2010 and 2011, the State of Florida strengthened regulations for pain clinics, prohibited physicians from dispensing opioid analgesics from their offices, and set reporting requirements for the state’s prescription drug monitoring program. Between 2010 and 2012, the rate of opioid analgesic overdose death dropped by 27 percent. However, it is important to note that the rate of heroin overdose death in Florida increased by 122 percent during the same time period. Florida’s experience underscores the importance of comprehensive approaches that also increase access to non-opioid pain management services and substance use disorder treatment services.
The Federal Government is working to support states in this mission. In his fiscal year 2017 budget, President Obama called for $1.1 billion in new funding to address the opioid epidemic. Most of that funding would be given to states to expand access to medication-assisted treatment services. Also of note for states this week, the United States Senate passed Senate Bill 524, known as the Comprehensive Addiction and Recovery Act of 2016. If passed as written, one section of the bill would authorize up to $5 million annually through fiscal year 2020 for grants to states to support comprehensive initiatives addressing prescription opioid and heroin abuse.
In addition to Gov. Baker, twelve other governors discussed prescription drug and heroin abuse during their 2016 State of the State Addresses. NASHP will continue to monitor and write about how these states – and the rest of the country – are working to reduce opioid misuse and abuse and strengthen their substance use treatment systems.
See our blog on legislation recently passed in Maine.