Washington Editor

WASHINGTON - A drug price control law was struck down in federal court, a ruling that refutes the measure passed earlier this year in the District of Columbia.

"It's a very strong opinion," said Charles Lucas, a vice president at the Biotechnology Industry Organization and its general counsel. "The kind of price control that just focuses on manufacturers, the way this statute did, is going to run into significant constitutional hurdles."

The court found the D.C. act unconstitutional, ruling that the "Prescription Drugs Excessive Pricing Act" violated both the supremacy and dormant commerce clauses of the Constitution. The former relates to the U.S. patent system, and the latter is connected to interstate trade.

With regard to the supremacy clause, Judge Richard Leon of the U.S. District Court of the District of Columbia called it "a clear obstacle to the accomplishment and execution of the purpose and objectives set by Congress in passing federal patent laws relating to prescription drugs." He added that the D.C. act directly contradicts the dormant commerce clause as it "effectively seeks to regulate transactions that occur wholly out of state."

The law was written to allow suits against drug companies by the D.C. government or an individual if the wholesale price of a patented prescription drug in D.C. is 30 percent higher than the price in Australia, Canada, Germany or the UK. Leon left little doubt as to his thoughts on the matter, though: "Punishing the holders of pharmaceutical patents in this manner flies directly in the face of a system of rewards calculated by Congress to ensure the continued strength of an industry vital to our national interests."

He granted declaratory and injunctive relief to the plaintiffs, the Biotechnology Industry Organization and the Pharmaceutical Research and Manufacturers of America (PhRMA). BIO's suit had charged that the D.C. act was pre-empted by federal law relating to the supremacy clause, the dormant commerce clause and the foreign commerce clause. Leon did not rule on that last charge, though Lucas said his language implied that international reference pricing would invoke a violation of it. (See BioWorld Today, Oct. 31, 2005.)

The D.C. act was the first bill of its kind in the country, and its rejection sends a message to other states wishing to adopt their own price control measures.

"It clearly confirms our belief that price controls over pharmaceuticals in this form are bad policy," Lucas said, "and we've always felt that it doesn't accomplish the kind of patient access that I think they would like to accomplish. [Instead] it certainly would have a chilling effect on innovation."

In opposition to the trade associations' suit, D.C. had charged that BIO and PhRMA lacked standing to challenge the act's constitutional status on behalf of their members, a charge the court denied. D.C. can appeal the ruling to a federal appellate level, and further to the Supreme Court, should it continue to fight its case.

Defendants in BIO's suit included D.C.'s mayor and its attorney general. The bill was introduced earlier this year and passed in September, after which it was forwarded to Congress. Federal lawmakers have ultimate oversight authority on laws passed here per a home rule bill that makes D.C. legislation subject to congressional review by Senate and House committees for 30 legislative days. That period expired earlier this month, after which Leon laid down his judgment.

"This is a significant opinion outlining the constitutional hurdles that any price control regime will have to confront," Lucas concluded.