NCPA - National Center for Policy Analysis


August 2, 2007

A Washington, D.C., law that would have capped the prices of prescription drugs in the District will remain out of commission.  An appeals court refused to overturn a lower court's ruling that blocked the law from taking effect, according to Dow Jones.

Under the original measure:

  • Manufacturers of a drug that cost 30 percent more in the District than in four designated high income countries -- such as Canada, Germany, Australia and Great Britain -- 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.

But the federal courts rejected the measure.  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," wrote the first judge to rule on the case.  The appeals court apparently agreed.

Source: "Appeals Court Blocks DC Drug Price Law," Wall Street Journal, August 1, 2007.

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