AAM requests federal injunction to block Minnesota’s drug price law

The Association for Accessible Medicines has filed a lawsuit against Minnesota Attorney General Keith Ellison, requesting that the federal district court in Minnesota enjoin the Attorney General from enforcing the price-control provisions of Senate File 2744.

AAM said that the discriminatory law, an unconstitutional overreach passed in May 2023, and taking effect this month, grants Minnesota unprecedented powers to regulate the national pharmaceutical market, violating the United States Constitution and posing harm to vulnerable patient communities. The suit was filed in the United States District Court for the District of Minnesota.

“The Minnesota law claims to be intended to lower drug costs, but it conspicuously does not apply to patented drugs sold by brand-name pharmaceutical companies—which account for three-quarters of total prescription drug spending,” AAM said, adding, “The Attorney General’s own Advisory Taskforce acknowledged that “the most egregious examples are found in the branded and specialty drug markets”—but the new law completely exempts branded and specialty drugs and applies only to generic drugs.  Taking aim at generic drugs makes no sense, because—as the Advisory Taskforce report says—encouraging the use of generic drugs helps to lower prescription drug costs.”

[Read more: AAM report: Middlemen increasingly block patient access to new generics]

Pointing out that if the legislation were to be enforced, it would most likely lead to fewer generic alternatives and less competition, which would harm and not help Minnesota patients, AAM said, “That is because it prohibits generic drug manufacturers from changing their prices by more than a set amount even if the cost of producing the drug increases. The U.S. Congress and Food and Drug Administration have pointed out that many key ingredients in drug manufacturing face shortages and supply-chain disruption, yet the Minnesota legislation would require manufacturers that face such a cost increase to sell their products at a loss.  That will drive generics out of the market, benefiting no one—except potentially brand-name pharmaceutical companies.”

AAM noted that it has successfully sued multiple other jurisdictions that have adopted similar laws, and in each case, federal courts have blocked the unconstitutional state laws from taking effect.

David Gaugh, interim president and CEO of AAM, said, “Rather than allow the vibrant competition in the generic drug marketplace to continue working for patients, Minnesota is rejecting generic competition in favor of more government regulation—of generic drugs, the only segment of healthcare costs that is actually declining.” Gaugh continued, “If this new law is enforced, it will harm patients and our communities by reducing choice and limiting access to essential medicines that people need.”

[Read more: AAM applauds Consolidated Appropriations Act of 2023]

AAM stated that SF 2744:

• Violates the Commerce Clause of the Constitution: The overreaching law claims that Minnesota has the power to regulate interstate commerce, including businesses and transactions outside the state of Minnesota. Under our Constitution, Attorney General Ellison does not have the right to govern businesses in other states. The law allows in-state pharmacies to raise prices when their costs increase—but denies that same treatment to manufacturers that face cost increases; and

• Violates the Constitutional Right to Due Process: The new law would allow the Attorney General to sue over transactions that have no connection to Minnesota at all—and even sue to punish companies for leaving the Minnesota market. Minnesota is one of 50 states, and it cannot threaten to enforce price regulations for the entire country.

“Generic drugs are a true success story. Generic medicines account for 91% of all prescriptions, but they only account for 18.2% of drug spending. Year over year, generic drug prices fall, while brand name drug prices rise. The overall price of generics fell by more than 5% in each of the last several years. In contrast, a recent study by the federal government found, “Drug spending is heavily driven by a relatively small number of high-cost products.” Spending on brand name drugs has continued to rise—and so has the cost per brand-name prescription. Generics saved Minnesota $5.3 billion, including state programs and your tax dollars—last year alone,” AAM said.

Lastly, AAM said it is committed to working with patients, healthcare professionals, advocacy groups, stakeholders and policymakers to develop smart, balanced policies that expand access to lifesaving medicines.

“We cannot allow misguided or bad policy to hinder the progress we are making on behalf of our nation’s patients. More competition from generics is proven to lower costs and increase access for all Americans. It’s time to stop the price controls in SF 2744 and work together to pass a law that will help patients today and into the future,” AAM concluded.