State drug price law doesn’t affect interstate commerce, judge rules

State drug price law doesn't affect interstate commerce, judge rules

A federal judge has upheld the legality of a 2017 California drug transparency law.

Senior U.S. District Judge Morrison C. England Jr. rejected claims from a pharmaceutical industry group that SB 17 violates the commerce clause of the U.S. Constitution by regulating interstate business. England agreed with the state's claims it "has a substantial public interest in the price and cost of prescription drugs" and that it did not regulate commerce outside its borders.

The plaintiff "claims SB 17 directly impacts out-of-state drug prices but what that impact may actually be remains unclear," England wrote on Monday in Pharmaceutical Research and Manufacturers of America v. David, 2:17-cv-02573-MCE-KJN (E.D. Cal., filed Dec. 8, 2017).

The law requires manufacturers to report price increases of 16% or more over a two-year period, and to provide a 60-day notice and an explanation for the increase to the Department of Managed Health Care and California Department of Insurance.

The pharmaceutical manufacturers group claimed this requirement would cause a de facto nationwide price freeze during each 60-day period. They also claimed the law violated the First Amendment by compelling speech and the 14th Amendment, because of vague language making it unclear if the law was retroactive. The named defendant was Robert P. David, then the director of the California Office of Statewide Health Planning and Development.

But England dispensed with each objection. The speech in question was "hardly inflammatory and does not force manufacturers to promote a state-sponsored message," he wrote. He also found the law does not attempt to set prices, merely to seek timely disclosure.

-- Malcolm Maclachlan