Washington Editor

WASHINGTON - In an effort to curtail a drug price control measure being pursued here, the Biotechnology Industry Organization has brought suit against the District of Columbia, asserting the unconstitutionality of the "Prescription Drugs Excessive Pricing Act."

The law was written to allow suits against drug companies by the DC government or an individual if the wholesale price of a patented prescription drug in DC is 30 percent higher than the price in Australia, Canada, Germany or the UK. It is the first bill of its kind in the country, although there is talk of state legislatures considering similar measures, and clearly drug companies and their representatives are looking to nip the movement in the bud.

"The DC act is pre-empted by federal law," BIO's complaint says, "and is therefore void."

The trade association's underlying argument against the bill's legality rests on three propositions that point to constitutional violations of the dormant commerce clause, which is related to interstate trade, the foreign commerce clause, which pertains to overseas trade, and the supremacy clause, which is connected to the U.S. patent system, as states cannot enact legislation that conflicts with an overarching congressional mandate. The lawsuit, filed in the federal district court of DC, seeks a judgment declaring the bill invalid and forbidding DC from enforcing it.

"If the court agrees with us with regard to all three of the issues that have been raised," said Charles Lucas, a vice president at BIO and its general counsel, "it would mean that other subsequent legislative activities would be subject to the same challenge."

Relative to the first point, BIO notes that its member companies sell most of their products to wholesalers or distributors with warehouses beyond DC's boundaries. Therefore, DC is trying to extend its reach into other states, the complaint says. Because "the Constitution provides that Congress alone has the power to regulate interstate commerce," Lucas told BioWorld Today, the DC bill would breach that clause.

BIO's suit also alleges that the DC bill would wrongly impact international commerce by benchmarking a U.S. drug price against those in the four foreign countries, all of which regulate prices, comparisons that Lucas labeled "completely inappropriate." He noted that the bill could cause companies to change overseas pricing, "so therefore DC is, in effect, seeking to have an impact and burden on foreign commerce."

Lastly, BIO's complaint notes that the local price control measure would upend the federal patent protection system that is intended to foster investments for innovation. Such an influence could have notable long-term ramifications, because "efforts like this around price controls have a tremendous negative effect on the capital markets," said Scott Whitaker, BIO's chief operating officer.

He noted that the matter is not about drug costs, but rather access, and voiced his opposition to using the legal arena to affect pricing when the underlying issue is deeper. "An uninsured individual isn't even going to benefit by a lower price of 5, 10, 15 or 20 percent, even if we go down that path," Whitaker told BioWorld Today. "The District needs to focus its attention on trying to provide its residents who don't have health insurance or access to drugs with some type of program to get them access to the medications that can save or improve their lives."

The bill, sponsored by DC Councilman David Catania, received unanimous council approval last month. At the time, Catania issued a statement calling the matter "a simple consumer protection issue." A subsequent comment accused drug companies of "lining their pockets as the cost of medicine increases beyond the means of our residents," but he concluded that "this law will contribute to more people having access to essential prescriptions."

Curiously, though, the bill does not include a provision against retailers such as pharmacies or drugstores, which mark up prices just before sales to consumers, raising questions of intent. "What is its real purpose, and why did they provide for such a broad opportunity for plaintiffs to bring litigation in any court in the U.S. and impose treble damages?" Lucas asked. "I think one would not have to stretch too far to have the operating premise that this is pursuing price control by litigation."

Early this month, DC Mayor Anthony Williams signed the bill and forwarded it to Congress, which has ultimate oversight authority per terms of DC's home rule bill that makes DC legislation subject to congressional review by Senate and House committees for 30 legislative days. Federal lawmakers are expected to act in early December.

"In order for us to effectively protect members," Lucas said, "we need to act prior to the time that the bill takes effect."

A hearing date has been set for Nov. 18 regarding a similar suit already filed by the Pharmaceutical Research and Manufacturers of America (PhRMA), and BIO is hoping to have its complaint heard at the same time. Defendants named in BIO's suit include DC's mayor and its attorney general. Lucas said the scheduling matter could be addressed today at a meeting with the judge.

A ruling after next month's hearing could be based on BIO's constitutional challenges, or could relate to procedural steps inherent in requests for injunctive relief. Appeals could follow that ruling, too.