Maryland SB 415: Public Health - Essential Generic Drugs - Price Gouging - Prohibition

Bill Text

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0415*

SENATE BILL 415
J1 7lr1059
CF 7lr1025
By: The President (By Request – Office of the Attorney General) and Senators
Conway, Astle, Benson, Currie, Feldman, Ferguson, Guzzone, Kelley, Lee,
Madaleno, Manno, Mathias, McFadden, Muse, Nathan–Pulliam, Peters,
Pinsky, Ramirez, Robinson, Rosapepe, Smith, Young, and Zucker
Introduced and read first time: January 27, 2017
Assigned to: Finance

A BILL ENTITLED

AN ACT concerning 1

Public Health – Essential Generic Drugs – Price Gouging – Prohibition 2

FOR the purpose of prohibiting a manufacturer or wholesale distributor from engaging in 3
price gouging in the sale of an essential generic drug; requiring the Maryland 4
Medical Assistance Program to notify the manufacturer of an essential generic drug 5
and the Attorney General of a certain increase in the price of the essential generic 6
drug under certain circumstances; requiring a manufacturer of an essential generic 7
drug to submit a certain statement to the Attorney General within a certain 8
timeframe; authorizing the Attorney General to require a manufacturer of an 9
essential generic drug to produce certain records or other documents that may be 10
relevant in determining whether a certain violation has occurred; authorizing a 11
circuit court, under certain circumstances, to issue certain orders compelling certain 12
actions, restraining or enjoining certain violations, and imposing a certain civil 13
penalty; prohibiting a person who is alleged to have violated a requirement of this 14
Act from asserting a certain defense; defining certain terms; and generally relating 15
to prohibiting price gouging in the sale of essential generic drugs. 16

BY adding to 17
Article – Health – General 18
Section 2–801 through 2–803 to be under the new subtitle “Subtitle 8. Prohibition 19
Against Price Gouging for Essential Generic Drugs” 20
Annotated Code of Maryland 21
(2015 Replacement Volume and 2016 Supplement) 22

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 23
That the Laws of Maryland read as follows: 24

Article – Health – General 25

2 SENATE BILL 415

SUBTITLE 8. PROHIBITION AGAINST PRICE GOUGING FOR ESSENTIAL GENERIC 1
DRUGS. 2

2–801. 3

(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 4
INDICATED. 5

(B) “AVERAGE MANUFACTURER PRICE” HAS THE MEANING STATED IN 42 6
U.S.C. § 1396R–8. 7

(C) (1) “ESSENTIAL GENERIC DRUG” MEANS ANY PRESCRIPTION DRUG: 8

(I) FOR WHICH ANY EXCLUSIVE MARKETING RIGHTS GRANTED 9
UNDER FEDERAL LAW HAVE EXPIRED; 10

(II) 1. THAT APPEARS ON THE MODEL LIST OF ESSENTIAL 11
MEDICINES MOST RECENTLY ADOPTED BY THE WORLD HEALTH ORGANIZATION; OR 12

2. THAT HAS BEEN DESIGNATED BY THE SECRETARY AS 13
AN ESSENTIAL MEDICINE DUE TO ITS EFFICACY IN TREATING A LIFE–THREATENING 14
HEALTH CONDITION OR A CHRONIC HEALTH CONDITION THAT SUBSTANTIALLY 15
IMPAIRS AN INDIVIDUAL’S ABILITY TO ENGAGE IN ACTIVITIES OF DAILY LIVING; AND 16

(III) THAT IS MADE AVAILABLE FOR SALE IN THE STATE. 17

(2) “ESSENTIAL GENERIC DRUG” INCLUDES ANY DRUG–DEVICE 18
COMBINATION PRODUCT USED FOR THE DELIVERY OF AN ESSENTIAL GENERIC 19
DRUG. 20

(D) “PRICE GOUGING” MEANS AN UNCONSCIONABLE INCREASE IN THE 21
PRICE OF A PRESCRIPTION DRUG. 22

(E) “STATE HEALTH PLAN” HAS THE MEANING STATED IN § 2–601 OF THIS 23
TITLE. 24

(F) “STATE HEALTH PROGRAM” HAS THE MEANING STATED IN § 2–601 OF 25
THIS TITLE. 26

(G) “UNCONSCIONABLE INCREASE” MEANS AN INCREASE IN THE PRICE OF 27
A PRESCRIPTION DRUG THAT: 28

SENATE BILL 415 3

(1) IS EXCESSIVE AND NOT JUSTIFIED BY THE COST OF PRODUCING 1
THE DRUG OR THE COST OF APPROPRIATE EXPANSION OF ACCESS TO THE DRUG TO 2
PROMOTE PUBLIC HEALTH; AND 3

(2) RESULTS IN CONSUMERS FOR WHOM THE DRUG HAS BEEN 4
PRESCRIBED HAVING NO MEANINGFUL CHOICE ABOUT WHETHER TO PURCHASE THE 5
DRUG AT AN EXCESSIVE PRICE BECAUSE OF: 6

(I) THE IMPORTANCE OF THE DRUG TO THEIR HEALTH; AND 7

(II) INSUFFICIENT COMPETITION IN THE MARKET FOR THE 8
DRUG. 9

(H) “WHOLESALE ACQUISITION COST” HAS THE MEANING STATED IN 42 10
U.S.C. § 1395W–3A. 11

2–802. 12

A MANUFACTURER OR WHOLESALE DISTRIBUTOR MAY NOT ENGAGE IN PRICE 13
GOUGING IN THE SALE OF AN ESSENTIAL GENERIC DRUG. 14

2–803. 15

(A) THE MARYLAND MEDICAL ASSISTANCE PROGRAM SHALL NOTIFY THE 16
MANUFACTURER OF AN ESSENTIAL GENERIC DRUG AND THE ATTORNEY GENERAL 17
OF ANY INCREASE IN THE PRICE OF AN ESSENTIAL GENERIC DRUG WHEN: 18

(1) THREE OR FEWER MANUFACTURERS ARE ACTIVELY 19
MANUFACTURING AND MARKETING THE ESSENTIAL GENERIC DRUG FOR SALE IN 20
THE UNITED STATES; AND 21

(2) THE PRICE INCREASE, BY ITSELF OR IN COMBINATION WITH 22
OTHER PRICE INCREASES: 23

(I) WOULD RESULT IN AN INCREASE OF 50% OR MORE IN THE 24
AVERAGE MANUFACTURER PRICE OR WHOLESALE ACQUISITION COST OF THE DRUG 25
WITHIN THE PRECEDING 2–YEAR PERIOD; OR 26

(II) WOULD RESULT IN AN INCREASE OF 50% OR MORE IN THE 27
PRICE PAID BY THE MARYLAND MEDICAL ASSISTANCE PROGR