McKenna on KIRO: New law lets A.G. target higher drug prices

KIRO 97.3 host Dave Ross asked Rob about a bill just passed by Maryland’s legislature that would allow the state’s attorney general to ask drug companies for an explanation if a drug’s price is dramatically raised. The company could then be taken to court, where a judge could reverse the price hike.

Dave Ross: “So the ultimate question, Rob: As former state attorney general, do you think such legislation ought to be attempted here?”

Rob McKenna: “I think it’s worth discussing…I think it would be better to see how it works in Maryland, because litigation is really expensive and so are investigations.

“We’ve considered an ‘unconscionability law’ when it comes to crises following natural disasters, but they’ve been kind of a hit-or-miss proposition in other states where they’re used, in terms of how effective they are.

“So, I think it’s a case where you might want to let someone else go first to see if it actually works, before taking the leap here in Washington or in other states. I know the Maryland attorney general. He’s a former state legislator of long standing. He’s aggressive. He’ll let us know pretty fast whether or not this law actually works in a practical sense for an A.G.”

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  • Gerald Barnett

    The Bayh-Dole Act, which controls patent rights on inventions made in federally supported research, requires federal agencies to receive a license “to practice and have practiced” each invention for and on behalf “of the United States.” This language has been used in executive branch patent policy since 1962. “Practice and have practiced” is defined to mean “to make, use, and sell; and to have made, used, and sold.” “United States” is, well, the states. In executive branch policy “the Government of the United States” is defined to include state and municipal governments. For drugs based on compounds invented with federal support, states have a license to “have made and have sold” those drugs for any state purpose.

    It would be interesting to see a state do more than object to high drug prices. For instance, Xtandi, a prostate cancer drug invented with federal support, sells in the US for about $70 a pill, but a generic drug company says they could produce the drug for $3 a pill. Why not just license a generic manufacturer to produce the drug for everyone that the state otherwise has to cover as a matter of health insurance? Maybe that’s just state employees, but that’s a start. For each 8-month treatment with a generic version of Xtandi, a state would save over $50,000. 20 patients = $1m in savings.