Governor Abandons Maine Rx Plan

Published July 1, 2003

Democratic Governor John Baldacci on May 30 formally abandoned plans for Maine Rx, submitting a proposal to the legislature for an alternative discount prescription drug plan called Maine Rx Plus. The plan is one element of the sweeping Dirigo Health strategy set forth by the governor in early May.

“Dirigo,” the state’s motto, means “I lead.”

The revamped prescription program, which if approved by the state legislature would go into effect by January 1, 2004, would provide discounts to fewer people and would be less expensive than the original.

Baldacci’s decision followed the U.S. Supreme Court’s May 19 ruling to lift an injunction on Maine Rx. Under that program, enacted in 2000, the state would have pressured pharmaceutical companies for additional rebates and discounts on prescription drugs equal to or larger than those set by federal law for the Medicaid program.

“Maine is moving very fast toward government-run single-payer health insurance,” warns Scott K. Fish, director of special projects for the Maine Public Policy Institute. “The revised Maine Rx program is part of that movement. Maine’s new Dirigo Health Plan is another part.”

The legislature approved Dirigo Health on June 13.

Original Maine Rx

The original Maine Rx Program authorized the state to act as benefits-manager on behalf of residents without prescription drug benefits. In that role, the state would seek to extract rebates and discounts from drug manufacturers in order to lower the price of prescription drugs.

The state would have passed the rebates and discounts on to pharmacies. In turn, the pharmacies would have charged residents without insurance coverage, regardless of their income, less for prescriptions than was charged to residents with insurance coverage.

Doctors prescribing drugs to Medicaid beneficiaries would have been required by Maine Rx to prescribe only drugs for which the state had secured a discount or rebate, unless the physician obtained prior authorization from the state to prescribe an “unapproved” alternative.

The law enabling Maine Rx also required the state to evaluate, by January 25, 2003, whether its benefits-manager efforts had been effective. If they had not, the state would impose price controls, establishing by July 2003 maximum prices to be paid for prescriptions.

The Pharmaceutical Research and Manufacturers of America (PhRMA) challenged the program in court, contending it violated the U.S. Constitution’s Commerce Clause and was pre-empted by the federal government’s Medicaid Act. A District Court agreed, enjoining the state from implementing the program, but the First Circuit Court of Appeals reversed that decision.

The U.S. Supreme Court’s ruling affirmed the appeals court’s decision and would have allowed Maine Rx to go into effect even while the case proceeded on its merits through the courts. But Baldacci opted instead to jettison Maine Rx in favor of the new proposal.

New Maine Rx Plus

When the PhRMA suit was argued before the Supreme Court in January, several Justices raised concerns about certain program components, leading Maine officials to scrap the original program in favor of Maine Rx Plus.

Maine Rx Plus is expected to cost the state about $800,000 in the next fiscal year and $2 million the following year–considerably less than Maine Rx’s projected annual cost of $4.5 million. An estimated 275,000 people would be eligible for the Maine Rx Plus drug discounts, fewer than the 325,000 eligible under the original program.

The Supreme Court had challenged the original program for lack of income caps on eligibility. Maine Rx Plus corrects that flaw, limiting eligibility to persons earning up to 350 percent of the federal poverty level–$31,430 for an individual, or $42,420 for a couple.

In addition, Maine Rx Plus offers significantly larger discounts on prescription drugs included in the state formulary than those planned under Maine Rx, according to Jude Walsh of the state’s Department of Human Services. The new discounts, which supporters of the plan say would range from 15 to 60 percent, would be funded by the state in full until Maine is able to negotiate rebates with drug makers.

“The perception of the average Mainer,” says MPPI’s Fish, “is that Maine Rx Plus will offer free drugs. It will not. It offers discounts only on certain drugs government bureaucrats add to the formulary because they decree them to be medically effective and reasonably priced.”

Formulary Issues

A formulary is a list of prescription drugs covered by a government program (or occasionally, a private insurer) under terms more favorable than other drugs. Drugs on a state government’s Medicaid formulary, for example, generally do not require a doctor to get prior authorization from state health care bureaucrats before prescribing them.

According to David Chess MD, founder, chairman, and president of Project Patient Care (, a nonprofit organization committed to improving patient care, “Prescribing medicines based on drug formulary restrictions has become an accepted health care practice. Medications prescribed using these restrictive formularies, however, may not always be medically appropriate or even safe for some patients.”

A Harris Interactive poll commissioned by Project Patient Care found formulary restrictions can lead physicians to prescribe a drug that’s on the formulary simply because it’s more convenient or less expensive to do so, even if the physician’s preferred drug would work better for the patient. Such medicine-switching can pose a threat to patient health, especially for older Americans, who tend to be more reliant on drugs than younger patients.

According to the Portland Press Herald, Democratic lawmakers have embraced the new Maine Rx Plus plan. House Republican Leader Joe Bruno said there was no opposition to the plan from his side of the aisle.

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].

More Information

The Harris Interactive survey, “Are Pharmaceutical Formularies Medically Safe?” is available on the Internet at

The full text of the U.S. Supreme Court’s decision on Maine Rx is available through PolicyBot. Point your Web browser to, click on the PolicyBot icon, and search for these documents: #12361 Syllabus (5pp.); #12362 Opinion of the Court (24pp.); #12363 Concurring Opinions of Breyer, Scalia, and Thomas (17pp.); #12365 Opinion of O’Connor (7pp.)