(Reuters) - A U.S. District Court judge on Friday cleared the way for Maryland to implement the nation’s first law designed to penalize drugmakers for price gouging by denying the generic drug industry trade group’s request for an injunction.
The state’s new law will go into effect as planned on October 1, according to the office of Maryland Attorney General Brian Frosh.
Under the statute, Maryland will field complaints and investigate “unconscionable increases” in prices for essential generic medicines. The measure applies only to older, off-patent drugs.
Violations will incur a fine of up to $10,000.
The Association for Accessible Medicines, a generic industry trade group which represents companies like Teva Pharmaceutical Industries Ltd and Novartis AG’s Sandoz unit, argue that the law is unconstitutional because it does not define price gouging and amounts to intervention by an individual state in interstate commerce.
U.S. District Judge Marvin Garbis wrote that the litigation can continue under the trade group’s argument that the law is too vague, but he dismissed other arguments.
Maryland’s law was passed by the state’s Democrat-controlled legislature in April and Governor Larry Hogan, a Republican, said in May that he would allow it to take effect without his signature.