District of Columbia residents can't sue for high drug costs

District officials may appeal the decision that strikes down the 2005 law.

By Amy Lynn Sorrel, AMNews staff. Aug. 27, 2007.

An August federal appeals court decision striking down a Washington, D.C., law aimed at controlling prescription drug prices could spark questions about similar state efforts, some legal experts say.

The U.S. Court of Appeals for the Federal Circuit ruled unanimously that the District of Columbia's Excessive Pricing Act violates federal patent laws and is unconstitutional.

The statute would let residents sue a drug manufacturer if a judge determines the wholesale cost of a patented medication in the district to be "excessive." The measure generally defines "excessive" as 30% higher than the drug's comparable price in the United Kingdom, Canada, Germany or Australia. The legislation passed in 2005, but a legal challenge filed by the Pharmaceutical Research and Manufacturers of America and Biotechnology Industry Organization halted it.

Although the court called the measure a "worthy undertaking," judges said it did not square with the goals of federal patent laws designed to encourage research and innovation of new drugs with monetary incentives.

"In [D.C.'s] judgment, patents enable pharmaceutical companies to wield too much market power, charging prices that are 'excessive' for patented drugs," the opinion states. But "the act is a clear attempt to restrain those excessive prices, in effect diminishing the reward to patentees in order to provide greater benefit to [D.C.] drug consumers."

Marjorie Powell, PhRMA's senior assistant general counsel, called the ruling "a victory for patients." She said patent protections are intended to promote investment in new drug development so that doctors and patients have more treatment options.