Veto Maryland House Bill 631, Which Would Harm Patients by Chilling Generic Drug Competition

Everyone supports proposals to control rising prescription drug prices, but H.B. 631 would just make the problem worse for Maryland patients and our economy.

  • Chester “Chip” Davis, Jr. calls on Governor Hogan in a commentary article for Maryland Matters to veto H.B. 631, legislation that would decrease generic drug competition in Maryland.  “In order to preserve the savings that generic drugs provide to Marylanders, Gov. Hogan should veto this bill,” said Davis.
  • H.B. 631 ignores the real cause of increasing prescription drug costs.  The bill only applies to generic drugs, not much more expensive brand-name drugs that cost Maryland patients and tax-payers billions of dollars per year.
    • Brand name drugs cost patients in Maryland over $3.5 billion dollars, while generics saved Maryland $3.7 billion, including state programs and your tax dollars – in just one year alone.
      • This equates to more than 28% of what Governor Hogan’s Administration proposed to spend on all healthcare expenditures in the state for FY 2017.
    • Generic drugs are a true success story. Generic medicines account for 90% of all prescriptions, but they only account for 27% of drug costs.
  • H.B. 631 would chill competition among generic drug manufacturers and allow government bureaucrats to operate the market instead of free market competition.  The bill allows the government to impose costs and regulatory burdens whenever bureaucrats believe that pricing of a medicine is “not justified.”
    • Year over year, generic drug prices fall, while brand name drug prices rise. The overall price of generics fell over 8% in 2016, and prices are down over 70% since 2008.  Rather than allow the free market to continue working, Maryland would become the first state to reject the market in favor of more government regulation.
    • By subjecting manufacturers of generic drugs to draconian penalties – while ignoring the substantial costs of brand-name prescription drugs – the policy in H.B. 631 would provide an incentive for generic drug companies to avoid selling their products in our state.
    • If fewer affordable generic drugs are available in Maryland, we all lose.
  • H.B. 631 has no meaningful standard to allow companies to know when they are breaking the law.  The bill does not define when a price is “not justified” or “excessive.”
    • Given the vague standards set forth in the bill, companies would perpetually be at risk of facing prosecution for taking actions that normally occur during the course of business within the competitive free market.
    • Without a true standard dictating when a free market price is “justified,” H.B. 631 would provide no notice for companies to know whether they are in violation of the new law.
    • Without clear guidance under the law, companies will need to find ways to mitigate the risk of costly litigation with the Attorney General, which creates incentives that could ultimately harm patients.
  • Gerard F. Anderson, a professor of health policy and management and professor of international health at Johns Hopkins University Bloomberg School Public Health said “the generic industry works incredibly well when there are three, four competitors in the market. It works less well when there are two, and it doesn't work at all when there's none."

Download a brief on Maryland House Bill 631

MD Oppose House Bill 631


Erica Klinger

By Erica Klinger, AAM Marketing Director

Association for Accessible Medicines


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