An association representing drug companies is suing the District over legislation aimed at reducing prescription drug prices.
The measure would make it illegal for pharmaceutical companies to sell prescription drugs at an "excessive price" in the District. It defines excessive as being 30 percent over the comparative price in Germany, Canada, Australia or the United Kingdom. The bill would allow courts to impose civil penalties on the drugmaker.
The suit, filed last week in U.S. District Court in Washington by the Pharmaceutical Research and Manufacturers of America, claims that the D.C. measure would institute "government-mandated price controls" that would violate patent law and constitutional protections of interstate commerce. The suit seeks to prevent the law from going into effect.
A hearing on the case is scheduled for Nov. 18. The legislation was passed unanimously by the D.C. Council and signed by Mayor Anthony A. Williams (D) on Oct. 4. The law would be implemented in January after the congressional review period ends.
"We stand firmly behind the legislation as passed," said Traci L. Hughes, spokeswoman for D.C. Attorney General Robert J. Spagnoletti.
Pharmaceutical industry representatives acknowledge that prescription drugs are expensive in the District but argue that the legislation would reduce revenue and profits needed to develop drugs. And they say European prices are set artificially low.
Eric H. Holder Jr., a former U.S. attorney who is an adviser to the pharmaceutical industry association, acknowledged that "consumers in the United States are paying more than their fair share" for prescription drugs.
"The attempt of this bill -- to artificially limit consumer prices at certain levels and using those other countries as a base -- will have a direct impact on innovation and the ability to get medicine to people with really basic problems: breast cancer, heart disease, coronary artery disease, high blood pressure," Holder said. "There is a direct connection between the ability of this industry to deal with those problems and come out with new, innovative medicines."
Council member David A. Catania (I-At Large), the author of the legislation, said District consumers pay on average 68 percent more than foreign consumers for popular new drugs. He cited research showing that a 200-milligram capsule of Celebrex is 75 cents in Australia, $1.58 in Germany and $3.19 in the United States.
"The pharmaceutical industry says, 'If we're not allowed to have the highest profits of any industry, we can't research new drugs,' '' Catania said. "They are lying. I don't know how to say that any clearer."
He said the measure uses the District's regulatory power on behalf of consumers.
"The law is very careful; we do not set prices,'' Catania said. "We do establish a threshold to what excessive prices are. The District has the right to determine the terms and conditions of sale of patented products."
The legislation would allow government officials or consumers to sue drugmakers if they believe a drug's price is excessive. Under the measure, once it is proved that the wholesale price is 30 percent higher than in the "high-income countries" designated in the bill, the burden would be on the drug manufacturer to prove that the price is not excessive.
The manufacturer could justify the price based on research and development costs, global sales and profits.
"Wouldn't they welcome a chance to come into court and prove their case?'' Catania said. "They can lay all this to rest about the true cost of research and development.''
But the pharmaceutical association said the issues would be decided on a case-by-case basis and would lead to a mountain of lawsuits and full employment for lawyers.
David W. Ogden, an attorney for the group, said that would amount to a "litigation tax'' placed on the industry.