Legal Resources
This resource library features Legal Analyses written by NASHP experts that address issues raised by the pharmaceutical industry. Also included are State Legal Filings that provide summaries and links to state documents that defend their drug cost containment actions in federal court.
Below are links to pertinent state legal documents filed in response to industry challenges of drug cost containment legislation. This is not a comprehensive list, however it provides information about what arguments states are making to defend their legislation.
International Reference Rates Analysis
NASHP’s Proposal for State-Based International Reference Pricing for Prescription Drugs, August 2020. This white paper by Rachel Sachs, JD, MPH, describes the international reference rate-setting proposal, considers key design choices, articulates and responds to potential legal challenges, and provides guidance on several potential implementation issues. Learn more about NASHP’s International Reference Rates model.
Unsupported Price Increases Analysis
NASHP’s Proposal for Imposing Penalties on Excessive Price Increases for Prescription Drugs, June, 2020. This analysis by Michelle Mello, JD, PhD, and Stacie B. Dusetzina, PhD, provides a roadmap for states that want to design legislation to regulate excessive price increases, and offers recommendations for avoiding legal challenges. An accompanying chart, highlights how NASHP’s model legislation addresses recommendations from this analysis. Learn more about NASHP’s Unsupported Price Increases model.
Analyses of Legal Challenges to State Efforts to Control Drug Prices
States have passed an unprecedented number of laws addressing drug prices over the past few years and some have faced legal challenges. This NASHP legal brief, Navigating Legal Challenges to State Efforts to Control Drug Prices: PBM Regulation, Price Gouging, and Price Transparency, by Katherine L. Gudiksen, PhD, Samuel M. Chang, JD, and Jaime S. King, JD, PhD, explores those challenges. The brief analyzes the arguments industry groups have made against pharmacy benefit manager regulations, anti-price-gouging laws, and drug price transparency requirements using the Dormant Commerce Clause and federal patent and trade secret laws.
Patent Law Analysis
This brief by Robin Feldman, Betty Chang Rowe, Rabiah Oral, Amy Y. Gu, and Katherine Gudiksen provides a Patent Law Analysis of NASHP Rate-Setting Model Act.
NASHP’s blog to learn more about Patent Law Analysis and drug cost regulation.
A Glossary of Pharmaceutical Terms
The terms used to describe different classes of drugs, the various players in the pharmaceutical industry, and drug approval and marketing can be complicated. NASHP’s easy-to-use glossary explains these complex references.
Challenges to Arkansas’ Pharmacy Benefit Manager Law
AR SB 688 – Rutledge vs. Pharmaceutical Care Management Association
The Pharmaceutical Care Management Association (PCMA) filed suit against a 2015 Arkansas law that ties reimbursement rates paid to pharmacies by pharmacy benefit managers (PBMs) to pharmacy acquisition cost. The US Court of Appeals for the Eighth Circuit ruled that the law was preempted by the Employee Retirement Income Security Act (ERISA) of 1974. In December 2020, the U.S .Supreme Court ruled that ERISA did not preempt the Arkansas legislation, finding that the statute was primarily directed at cost regulation. In 2021, the Court reaffirmed this decision in a substantively similar case arising from a different Eighth Circuit opinion — Pharm. Care Mgmt. Ass’n v. Tufte (2020).
Filings:
- Supreme Court reverses Eighth Circuit, finds ERISA does not preempt Arkansas legislation
- NASHP blog: In Major Victory for States, Supreme Court Clears the Way for State Health Reform (December 2020)
- US Court of Appeals for the Eighth Circuit decision that found that ERISA pre-empted Arkansas’ law regulating PBMs 6/8/2018
- Arkansas Attorney General’s request that the US Supreme Court review the Eighth Circuit ruling 10/22/2018
- Brief of petitioner Leslie Rutledge 2/24/2020
- Brief of respondent Pharmaceutical Care Management Association 3/25/2020
- Complete Supreme Court docket
Amicus Briefs:
- National Association of Chain Drug Stores, in support of Arkansas 3/2/2020
- States and the District of Columbia, in support of Arkansas 3/2/2020
- Solicitor General, in support of Arkansas 3/2/2020
- Retail trade associations, in support of Arkansas 3/2/2020
Challenges to Drug Price Transparency Laws
Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit against a 2017 California law (CA SB 17) that requires pharmaceutical manufacturers to report price increases that meet specified thresholds for drugs sold in the state and to provide a 60-day notice of certain price increases to public and private payers. PhRMA’s complaint claims the law violates the Dormant Commerce Clause (DCC) by regulating interstate commerce, the First Amendment by compelling speech, and the Fourteenth Amendment’s Due Process Clause because it is impermissibly vague. In January 2021, the US District Court for the Eastern District of California rejected both PhRMA’s DCC and First Amendment claims, denying PhRMA’s request for a summary judgement.
Filings:
- NASHP blog: District Court Judge Upholds California’s Rx Transparency Law, Adding Another Win for States, January 2021
- PhRMA’s initial complaint 12/8/2017
- California’s motion to dismiss PhRMA’s lawsuit 1/26/2018
- PhRMA’s response to California’s motion to dismiss 2/26/2018
- US District Court’s decision dismissing PhRMA’s lawsuit 8/30/2018
- PhRMA’s refiled, amended lawsuit that includes additional information demonstrating harm to PhRMA members from CA SB 17 9/28/2018
- US District Court’s decision allowing PhRMA’s amended lawsuit 7/30/2019
- US District Court’s decision upholding California’s transparency law 1/4/2021
Amgen filed suit against California Correctional Health Care Services (CCHCS) to block the release of advance notice of drug price increases per a public record request.
California’s law CA SB 17 requires drug manufacturers to submit a notice to public and private payers 60 days before a drug price increase that surpasses a specified threshold. In 2018, Amgen submitted a notice of pending drug price increases to purchasers registered with the state, including CCHCS. CCHCS later notified Amgen that it planned to release the information to a reporter in response to a California Public Records Act request. Though Amgen obtained a preliminary injunction, CCHCS challenged the ruling, and the injunction was later lifted by the California Court of Appeal, allowing CCHCS to share the information.
Filings:
- Superior Court of Los Angeles’ order [link to order granting injunction .pdf] granting Amgen’s motion for a preliminary injunction 2/1/2019
- CCHCS’s brief [link to CCHSC brief .pdf] appealing the preliminary injunction 5/27/2019
- California Court of Appeal’s decision reversing the lower court’s order 4/9/2020
Other Resources:
- NASHP blog: Court Rules California Can Share Advance Notice of Rx Price Hikes, April 2020
The Pharmaceutical Research and Manufacturers of America (PhRMA) challenged two Oregon drug cost transparency laws. HB 4005 requires drug manufacturers to submit pricing information for drugs whose prices increase above a certain threshold, and HB 2658 requires manufacturer to report specified price increases to the state at least 60 days before they take effect.
PhRMA argues the laws violate the Dormant Commerce Clause by restricting drug prices nationwide, the First Amendment by compelling speech, and the Fifth Amendment Takings Clause. PhRMA also claims the laws are preempted by the Defend Trade Secrets Act.
Filings
PhRMA’s Initial Complaint 12/9/19
Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovations Organization (BIO) challenged a Nevada law SB 539 that requires manufacturers and pharmacy benefit managers to report pricing information for essential diabetes medications. PhRMA and BIO argued that the law was pre-empted by federal patent law and the Defend Trade Secrets Act and that it violated the Fifth Amendment Takings Clause and the Dormant Commerce Clause.
The associations dropped the lawsuit in June 2018 after Nevada’s Department of Health and Human Services adopted regulations that allow manufacturers and pharmacy benefit managers to request that specific price report information be kept confidential.
Filings:
- PhRMA and BIO’s initial complaint 9/1/2017
- PhRMA and BIO’s request for an immediate injunction 9/13/2017
- US District Court District of Nevada ruling denying the manufactures’ request for an injunction 10/17/2017
- Nevada Department of Health and Human Services implementing regulations 5/31/2018
- Joint status report that ended the lawsuit 6/28/2018
CA AB 824 Challenge to California’s Pay-for-Delay Law (Association for Accessible Medicines vs. Becerra)
CA AB 824 established that if a generic manufacturer receives anything of value from a brand-name drug manufacturer that has sued for patent infringement, such “pay-for-delay” agreements are anticompetitive – unless a company can prove otherwise. The Association for Accessible Medicines (AAM) claims the California’s pay-for-delay law violates the Dormant Commerce Clause, prohibitions on excessive fines, due process and federal patent law.
In December 2019, the U.S. District Court for the Eastern District of California denied AAM’s request for a preliminary injunction. AAM then appealed to the Ninth Circuit Court of Appeals, which recommended the District Court dismiss the case because AAM did not establish standing. The District Court dismissed the case, in line with the Ninth Circuit’s recommendation. In August 2020, AAM refiled its complaint with the US District Court, including additional evidence in an attempt to establish standing. The District Court granted AAM’s motion for a preliminary injunction in December 2021. In February 2022, however, the federal District Court modified the injunction to permit California to enforce only those “provisions of AB 824 with respect to settlement agreements negotiated, completed, or entered into within California’s borders.” The District Court reasoned this would avoid DCC concerns since these agreements only “regulate conduct occurring wholly within California’s borders.” The modified preliminary injunction will remain in effect as the parties prepare for trial, unless the court further amends its order.
Filings:
- US District Court (E.D. Cal.) modifies preliminary injunction to enforce provisions against wholly California-based settlement agreements
- AAM’s initial complaint 11/12/19
- U.S. District Court Eastern District of California’s dismissal of AAM’s motion for a preliminary injunction 12/31/19
- AAM’s notice of appeal in the US Court of Appeals for the Ninth Circuit 1/2/20
- California’s opposition to AAM’s motion for injunction pending appeal 1/6/20
Challenge to Minnesota’s Insulin Affordability Law
MN HF 3100: Pharmaceutical Research and Manufacturers of America vs. Williams et al – Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit against the members of the Board of Pharmacy and the Board of MNSure to stop the implementation of a law that requires insulin manufacturers to make insulin available to eligible individuals who are in urgent need of affordable insulin. PhRMA argues that HF 3100 violates the Fifth Amendment Takings Clause because it requires manufacturers to provide insulin for a certain price. In March 2021, the U.S. District Court of Minnesota dismissed the lawsuit, ruling that there had been no “taking” when the case was filed, and that PhRMA would have to show that they had sought compensation for the alleged taking and had been unsuccessful. PhRMA appealed the District Court’s ruling to the Eighth Circuit, arguing before a three-judge panel in December 2021.
Filings:
- PhRMA’s initial complaint 6/30/20
- Board of Pharmacy and Board of MNSure’s motion to dismiss PhRMA’s lawsuit 8/27/2020
Challenge to Maryland’s Anti-Price-Gouging Law
MD HB 631: Association for Accessible Medicines vs. Frosh
The Association for Accessible Medicines (AAM) filed a lawsuit challenging Maryland’s anti-price-gouging law in US District Court for the District of Maryland. AAM argued that the law violated the Dormant Commerce Clause (DCC) by regulating commerce outside the state and that it was impermissibly vague. The District Court for Maryland dismissed most of AAM’s suit, but AAM appealed and the Fourth Circuit Court of Appeals overturned the District Court’s decision, ruling that the law violated the DCC. The US Supreme Court rejected the attorney general’s request to review the Fourth Circuit’s decision.
Filings:
AAM’s Initial Complaint 7/6/2017
Maryland’s Motion to Dismiss 8/14/2017
Maryland’s Filing Opposing AAM’s Motion for an immediate preliminary injunction 8/15/2017
US District Court’s decision dismissing most of PhRMA’s lawsuit 9/29/2017
AAM’s Appeal to the Fourth Circuit Court of Appeals 10/12/2017
US Court of Appeals for the Fourth Circuit’s Decision striking down the law 4/13/2018
Maryland Attorney General’s request that the US Supreme Court review the Fourth Circuit decision 10/2018
These legal analyses, written by NASHP experts, address key issues that the pharmaceutical industry raises in its legal challenges of state actions to contain drug costs.
States have passed an unprecedented number of laws addressing drug prices over the past few years and some have faced legal challenges. This NASHP legal brief, Navigating Legal Challenges to State Efforts to Control Drug Prices: PBM Regulation, Price Gouging, and Price Transparency, by Katherine L. Gudiksen, PhD, Samuel M. Chang, JD, and Jaime S. King, JD, PhD, explores those challenges. The brief analyzes the arguments industry groups have made against pharmacy benefit manager regulations, anti-price-gouging laws, and drug price transparency requirements using the Dormant Commerce Clause and federal patent and trade secret laws.
Dormant Commerce Clause
When states pass laws designed to control prescription drug costs, the pharmaceutical industry often responds with lawsuits claiming states are hindering interstate commerce and violating the federal Dormant Commerce Clause (DCC). NASHP’s legal experts believe states can craft drug cost policies that can withstand industry challenges.
This brief by Anna Zaret, JD, and Darien Shankse, PhD, JD, MA, provides insight and analysis about DCC case law and highlights what state policymakers need to consider when drafting drug cost polices.
NASHP’s blog about the Dormant Commerce Clause and drug cost regulation.
NASHP’s easy-to-understand table featuring Dormant Commerce Clause’s “Dos and Don’ts.”
Patent Law Analysis
This brief by Robin Feldman, Betty Chang Rowe, Rabiah Oral, Amy Y. Gu, and Katherine Gudiksen provides a Patent Law Analysis of NASHP Rate-Setting Model Act.
NASHP’s blog to learn more about Patent Law Analysis and drug cost regulation.
A Glossary of Pharmaceutical Terms
The terms used to describe different classes of drugs, the various players in the pharmaceutical industry, and drug approval and marketing can be complicated. NASHP’s easy-to-use glossary explains these complex references.
Below are links to pertinent state legal documents filed in response to industry challenges of drug cost containment legislation. This is not a comprehensive list, however it provides information about what arguments states are making to defend their legislation.
Arkansas – Pharmacy Benefit Manager (SB 688)
The Pharmaceutical Care Management Association (PCMA) filed suit against the Arkansas 2015 law regulating reimbursement rates paid to pharmacies by pharmacy benefit managers. The US Court of Appeals for the Eighth Circuit ruled that the law was pre-empted by the Employee Retirement Income Security Act (ERISA) of 1974. The US Supreme Court took up Arkansas’ appeal of the Eighth Circuit ruling and is expected to issue a decision in 2020.
US Court of Appeals for the Eighth Circuit Decision 6/8/2018
Arkansas Attorney General’s request that the US Supreme Court review the Eighth Circuit ruling that ERISA pre-empts state regulation of pharmacy benefit managers 10/22/2018
Brief for Petitioner Leslie Rutledge, in her capacity as Arkansas Attorney General 2/24/2020
Amicus Brief for the National Association of Chain Drug Stores 3/2/2020
Amicus Brief for 45 states and the District of Columbia 3/2/2020
Amicus Brief for the Solicitor General 3/2/2020
Amicus Brief for 24 retail trade associations 3/2/2020
Complete docket, including additional amicus briefs, available here.
California – Drug Price Transparency (SB 17)
The Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit in US District Court, Eastern District of California, challenging the legality of the new law. Below are the case filings:
PhRMA’s Initial Complaint challenging California’s new law 12/8/2017
California’s Motion to Dismiss PhRMA’s lawsuit 1/26/2018
PhRMA’s response to California’s motion to dismiss 2/26/2018
PhRMA’s Request for Judicial Notice 2/26/2018
US District Court Judge Morrison England’s decision dismissing PhRMA’s lawsuit 8/30/2018
PhRMA’s refiled, amended lawsuit challenging California’s law 9/28/2018
US District Court Judge Morrison England’s decision allowing PhRMA’s amended lawsuit 7/31/2019
California – Pay-for-Delay (AB 824)
The Association for Accessible Medicines (AAM) filed suit in US District Court, Eastern District of California, challenging the legality of the law. Below are the case filings:
AAM’s Initial Complaint challenging California’s law 11/12/19
U S District Court Eastern District of California’s dismissal of AAM’s motion for a preliminary injunction against the law’s enactment 12/31/19
AAM’s Notice of Appeal in the US Court of Appeals for the Ninth Circuit 1/2/20
California’s opposition to AAM’s motion for injunction pending appeal 1/6/20
Maryland – Anti-Price-Gouging (HB 631)
The Association for Accessible Medicines (AAM), formerly the Generic Pharmaceutical Association, filed a lawsuit challenging Maryland’s anti-price-gouging law in US District Court for the District of Maryland. Below are the case filings:
AAM’s Initial Complaint and request for a preliminary injunction challenging Maryland’s new law 7/6/2017
Maryland’s Motion to Dismiss AAM’s complaint 8/14/2017
Maryland’s Filing Opposing AAM’s Motion for an immediate preliminary injunction against the law’s enactment 8/15/2017
US District Court Judge Marvin J. Garbis dismissal of much of AAM’s motion for a preliminary injunction 9/29/2017
AAM’s Motion for a Temporary Injunction, asking for an immediate injunction against the law’s enactment 10/12/2017
US Court of Appeals for the Fourth Circuit Decision on AAM’s appeal. This decision struck down Maryland’s anti-price-gouging legislation. 4/13/2018
Maryland Attorney General’s request that the US Supreme Court review the Fourth Circuit decision that overturned Maryland’s anti-price-gouging law and answer the question: “Does the Commerce Clause prohibit a state from protecting consumer access to essential off-patent and generic prescription drugs by requiring manufacturers to refrain from unconscionably raising the price of those drugs sold in the state?” 10/2018
The US Supreme Court denied Maryland’s request to review the Fourth Circuit’s ruling, which struck down the law. 2/19/19
Nevada – Drug Price Transparency (SB 539)
The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovations Organization (BIO) challenged Nevada’s drug cost transparency law in US District Court for the District of Nevada. PhRMA and BIO dropped the lawsuit in June 2018 after Nevada’s Department of Health and Human Services adopted regulations that allow manufacturers and pharmacy benefit managers to request that specific price report information be kept confidential. Below are the case filings and new regulations:
PhRMA and BIO’s Initial Complaint challenging Nevada’s new law 9/1/2017
The Drug Manufacturers’ Request for an Immediate Injunction to stop implementation of the law 9/13/2017
US District Court Judge James Mahan’s Ruling that denied the manufactures’ request for an injunction 10/17/2017
Nevada Department of Health and Human Services implementing regulations 5/31/2018
Joint Status Report that ended the lawsuit 6/28/2018
Oregon – Drug Price Transparency (HB 4005 and HB 2658)
The Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit in US District Court, District of Oregon, challenging the legality of the two laws. Below is the case filing:
PhRMA’s Initial Complaint challenging Oregon’s law 12/9/19
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