Maryland has been active in regulating prescription drug costs in recent terms. In the current legislative session, two bills have been introduced to address price transparency (SB 201) and affordability (SB 169) of drugs and medical supplies. In the 2017 legislative term, Maryland passed HB 631, which combats price gouging and gives Maryland’s Attorney General the power to hold companies accountable for unconscionable increases in generic or off-patent drug prices. The purpose of the bill is to rein in rising drug costs, reduce premiums, and promote equitable health outcomes.
Maryland’s current regular legislative session runs from 1/10/18 – 4/10/2018.
Recent Legislative Developments
|2018||SB 201||PRESCRIPTION DRUG MANUFACTURERS – SALES TO WHOLESALE DISTRIBUTOR: Requiring a prescription drug or device manufacturer to submit certain average sales prices to the Maryland Department of Health for each calendar quarter within 30 days after the end of the quarter; requiring the Department to make the average sales price submitted by a manufacturer available on the Department’s website not later than 10 days after it receives the average sales prices; prohibiting the manufacturer from denying a wholesale distributor the right to purchase prescription drugs or devices if the wholesale distributor agrees to pay the manufacturer’s average sales price for the prescription drug or device||Active – Referred to Senate Finance Committee.
|2017||HB 631||PROHIBITING A MANUFACTURER OR WHOLESALE DISTRIBUTOR FROM ENGAGING IN PRICE GOUGING IN THE SALE OF AN ESSENTIAL OFF-PATENT OR GENERIC DRUG: The new law defines an unconscionable price increase as an increase that is excessive and unjustified, and that harms consumers because of the drug’s importance for their health and because there isn’t enough market competition to ensure access to the drug. If the Maryland Attorney General concludes that unconscionable price gouging has happened, they have to meet with the drug manufacturers and wholesalers to talk. They then have the power to go to the State Circuit Court. The State Circuit Court can require a number of solutions: requiring drug manufacturers or wholesalers to provide relevant information to the Attorney General, issuing orders restraining or enjoining price gouging activities, restoring money to consumers lost as a result of price gouging, or requiring drug manufacturers to make the drug available to Medicaid enrollees at the pre gouging price for a year. Finally, the Court can impose a civil penalty of up to $10,000 for each violation.||Passed.|
|2018||SB 169||RELATING TO ESTABLISHING A PRESCRIPTION DRUG AND MEDICAL SUPPLY ACCESS AND AFFORDABILITY WORKGROUP: would require the Secretary of Health to convene a workgroup to study the advisability of the State forming a generic drugs and medical supplies purchasing cooperative and establishing Maryland as an open formulary State; would require the workgroup to report its findings and recommendations to the Governor and the General Assembly on or before January 1, 2019.||Active – Referred to Senate Finance Committee.|
|2016||HB 990/SB 834||RELATING TO THE CERTIFICATION OF QUALIFIED HEALTH PLANS (QHPs): would require that a QHP meet specified requirements related to network adequacy and that the QHP have a benefit design that does not discriminate against an individual or use discriminatory medical management techniques. With respect to the network adequacy component, a QHP must annual submit information to the Insurance Commissioner regarding actions taken to ensure network adequacy. If the network falls below the adequacy standards during the plan year, the plan must authorize the receipt of covered services by an out-of-network provider at the same cost sharing level as an in-network provider.||Inactive — Died.|
We compile state statutes relate to healthcare price and competition, including healthcare transparency, markets, and costs. For a complete listing of all health related statutes visit the State Health Practice Database for Research.
- Code Ann., Ins. § 31-102 establishes the Maryland Health Benefit Exchange as a corporate instrumentality of the State, with the goal of reducing the number of uninsured in the state, facilitating the sale and purchase of qualified health plans, assisting qualified employers in enrolling their employees in the small group health insurance market and accessing small business tax credits, and aiding individuals in accessing public programs, cost sharing reductions and premium tax credits.
- Executive Order 01.01.2011.10 created the Office of Health Care Reform, authorized December 31, 2015, with a mandate to provide leadership, oversight, and coordination for Maryland’s implementation of health care reform under the ACA. The Office also conducts a public education and outreach campaign to keep the public informed of health care reform implementation.
Transparency in Healthcare
- Md. Health-General Code § 19-133 establishes the Maryland Medical Care Database, a type of All-Payer Claim Database (APCD) operated by the Maryland Health Care Commission ( implementing regulations). An APCD is a database for aggregating health care claims data from payer sources in order to compare costs among physicians and health care systems (see the APCD Council website for more information). Maryland’s APCD collects information for each patient encounter with a provider or facility, including patient information, procedures performed, what drugs were prescribes, and the charges imposed. The Commission also publishes an annual report on certain health care services that describe the variation in fees charged by practitioners and facilities on a statewide basis.
- Md. Health-General Code § 19-207 establishes the Health Services Cost Review Commission (HSCRC) as an independent body within the Department of Health that is charged with regulating hospital rates for all payers in Maryland, including the collection and publication of hospital data and operating performance, in order to promote cost containment and financial accountability in hospital care.
- Md. Code Ann., Ins. §15-112(l) prohibits the use of most favored nations clauses between an insurance carrier and a provider. A most favored nations clause is an agreement between a payer (such as an insurance company) and a provider that typically requires a provider to give the payer the lowest rate that it gave to any other comparable payer, which can be anticompetitive by encouraging oligopolistic pricing by large payers and increasing barriers for new entrants.
- Md. Code Ann., Ins. §27–101 et seq. prohibits unfair methods of competition and unfair and deceptive trade practices in the business of insurance.
- Md. Code Ann., Ins. §§11–601 through 11-604 requires that changes to health benefit plan rates in the small group and individual markets be reviewed and approved by the Maryland Insurance Administration. Health insurance companies must justify the proposed rate changes, and proposed rate increases must be noticed to enrollees on the carrier’s website. The public may comment on proposed rate increases on the Administration’s website.
- Md. Health-General Code §§ 19-120 through 19-127 requires that a health care facility obtain a Certificate of Need (CON) prior to building, expanding, or moving a health care facility within the state, and prior to making a large capital expenditure. A Certificate of Need is a license issued by the Maryland Health Care Commission that ensures that there is a demonstrated unmet need in the population to be served, that the project addresses that need and is viable, whether there are more cost-effective alternatives, and also considers the impact on existing providers and the health care delivery system.
- Md. Health-General Code § 19-129 empowers the Maryland Health Care Commission, as an exemption to competition law, to approve a merger or consolidation of two or more hospitals even though it may limit economic and competition if it will result in more efficient hospital services and is in the public interest.
FY 2018 BUDGET
Maryland’s fiscal year begins on July 1 and ends on June 30 in the following year. Maryland enacted its FY 2018 Budget during the 2017 regular legislative session. To view Maryland’s FY 2018 Budget, click here.
Antitrust (Healthcare Markets)
- Maryland was one of 16 states to file an amicus brief supporting the FTC’s winning position in the Ninth Circuit appeal of St. Luke’s Health Care Sys. v. FTC, decided February 10, 2015. The States’ brief stated that the acceleration of health care costs due to the growth of large health care provider systems had become a matter of grave concern.