By Eric M. Weiss
Washington Post Staff Writer
Friday, December 23, 2005

A federal judge ruled yesterday that a District law designed to reduce the price of prescription drugs is unconstitutional and blocked its implementation.

U.S. District Judge Richard J. Leon said the law, passed this fall, violates constitutional protections of interstate commerce and goes against the will of Congress.

The law makes it illegal for pharmaceutical companies to sell prescription drugs at an "excessive price" in the District. It defines excessive as being 30 percent higher than the price in such "high-income countries" as Germany, Canada, Australia and Britain.

Pharmaceutical industry groups, which had filed the legal challenge in October, applauded the decision. D.C. Council member David A. Catania (I-At Large), the law's author, said the city should appeal.

"This is an important issue and one worthy of a fight," Catania said. "No one suggested it would be quick or easy."

The law was passed unanimously by the D.C. Council in September and signed by Mayor Anthony A. Williams (D) in early October.

Under the measure, the manufacturer of a drug that cost 30 percent more in the District than in the four designated countries would have to prove that the price was not excessive. The drug company could seek to justify the price based on research-and-development costs, its profit margin or other factors. If the manufacturer failed in that effort, a court could impose civil penalties.

Leon's opinion said the District law is in direct conflict with federal patent law, in which Congress designed a "carefully crafted bargain" intended to provide pharmaceutical companies with incentives to develop drugs. Those incentives include exclusive sales rights for a certain period, he said.

"Punishing the holders of pharmaceutical patents in this manner flies directly in the face of a system of rewards calculated by Congress to insure the continued strength of an industry vital to our national interests," Leon wrote.

The opinion also said the law would violate the constitutional protection of interstate commerce because, among other reasons, the drugs are manufactured, stored and bought outside the District.

"Although no other state has adopted a statute like the D.C. Act to date, it takes little imagination to envision the harm to interstate commerce that could be caused by the domino effect of similar legislation being adopted in many, or every, state," Leon wrote.

Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, praised the decision. The industry group was one of the two plaintiffs in the suit. The other was the Biotechnology Industry Organization.

"We are pleased the court today declared the District's price control bill on prescription medicine unconstitutional and blocked the enforcement of this damaging legislation," Tauzin said in a written statement. "Today's ruling is good news for residents of the District of Columbia and for the future of pharmaceutical research and development."

Catania vowed to continue the legal battle and keep an open mind about revising the law.

"That's why appeals courts exist," Catania said.

A spokesman for D.C. Attorney General Robert J. Spagnoletti did not return several calls.

Catania said it was "a fascinating spectacle watching the pharmaceutical companies argue why they have to charge District residents more than 30 percent higher prices for drugs than residents of other countries."

Pharmaceutical industry representatives say that European drug prices are set artificially low and that the District's law would reduce revenue and profits needed to develop drugs.

Council member Vincent C. Gray (D-Ward 7), a member of the council's Health Committee, said that in the wake of the legal setback, "it is important to keep our focus: the increasing cost and reliance on pharmaceuticals and how we bring some balance.''

"If this [law] is not the instrument that can get it done, then we need to look at others,'' he said.