Business

Federal appeals court strikes down drug price-gouging law

A federal appeals court on Friday struck down Maryland’s first-in-the-nation law against pharmaceutical price gouging.

In a 2-1 ruling, the 4th US Circuit Court of Appeals ruled the law is unconstitutional because it forces manufacturers and wholesalers to act in accordance with Maryland law outside of Maryland, burdening interstate commerce.

‘‘Maryland cannot, even in an effort to protect its consumers from skyrocketing prescription drug costs, impose its preferences in this manner,’’ Judge Stephanie Thacker wrote.

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The law enabled Maryland’s attorney general to sue makers of off-patent or generic drugs that make an ‘‘unconscionable’’ price increase. That was described as an excessive increase, unjustified by the cost of producing or distributing the drug.

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Thacker wrote that the Commerce Clause protects against inconsistent legislation arising from the projection of one state’s regulations into the jurisdiction of another state. She also noted that the Maryland law’s ‘‘relatively subjective decision’’ about what constitutes an unlawful price increase worsens the problem.

Under the law, manufacturers faced fines of up to $10,000 per violation. The attorney general also was able to seek information from the corporations that instituted price increases to help determine if price gouging occurred.

Maryland Attorney General Brian Frosh said the state is evaluating all options with regard to next steps.

‘‘We are disappointed with the court’s decision,’’ Frosh said. ‘‘As Judge Wynn’s dissent explains, the panel majority misunderstood the scope of the statute, which protects Maryland consumers.’’