Maine Rx Discounts Are Illegal, Court Rules

Published February 1, 2003

The U.S. Circuit Court of Appeals for the District of Columbia on December 24, 2002 rejected the Healthy Maine Prescriptions program launched in June 2001. The decision represents a victory not only for pharmaceutical companies, but also for consumers, who would have paid for the new entitlement with higher drug prices and restricted access to innovative new drugs.

“We recognize the desire of states like Maine and Vermont to help seniors pay for their prescription drugs,” noted Marjorie Powell, assistant general counsel for the Pharmaceutical Research and Manufacturers of America (PhRMA), which had brought the suit. “But these programs are the wrong way to do it. States should work with us to urge Congress to pass a Medicare prescription drug benefit this year.”

Unapproved Expansion of Medicaid

Taking advantage of a Section 1115 Medicaid waiver approved by the federal government on January 18, 2001, the Healthy Maine program provided discounts of as much as 25 percent on prescription drugs for about 108,000 uninsured Maine residents with incomes less than 300 percent of the federal poverty level who do not qualify for Medicaid.

Shortly after the legislature approved the program, PhRMA filed suit in federal court to block its implementation. But in February 2002, U.S. District Court Judge Ricardo Urbina approved the program. PhRMA appealed.

Maine policymakers modified the plan after the District of Columbia Circuit Court overturned a similar Vermont program. Maine lawmakers tried to distinguish their program from Vermont’s by agreeing to pay from tax dollars 2 percent of the cost of prescriptions filled through the program.

PhRMA attorney John Roberts said the U.S. Department of Health and Human Services (HHS) never approved the state’s contribution to Healthy Maine. The appeals court’s three-judge panel agreed, deciding Healthy Maine was therefore an “illegal expansion of Medicaid.” Wrote Judge Harry Edwards, “To the extent that the modified Maine program purports to be different from the flawed Vermont program, it has yet to be considered or approved by the federal government.”


PhRMA officials were pleased with the Circuit Court’s ruling. Noted spokesperson Bruce Lott, “As they did in the [Vermont] case a year ago, the court has ruled that this type of program violates Medicaid law.”

The Medicines Work Coalition of North Carolina was among many groups supporting PhRMA’s position in the matter. Coalition members include health care associations, voluntary health associations, patient advocacy leaders, representatives from the pharmaceutical industry, and other health care related associations.

“We are extremely concerned with the dangerous precedent being set to allow state governments to arbitrarily restrict, delay, and interfere with access to clinically necessary treatments,” said, Teri Anulewicz of the Coalition. “Denying access to medications places patients in potentially unsafe and life threatening situations.”

Moreover, noted PhRMA counsel Powell, “Maine’s program runs the risk of harming the health of Medicaid patients by limiting their access to needed prescription drugs. Individual doctors should be allowed to make decisions based on what’s best for their individual patients without the interference of government officials.”

State officials said they did not believe the decision means the program must “shut down.” They plan to address the court’s concerns by working with state legislators and HHS Secretary Thompson to modify the plan.

More Litigation Ahead

While Pine Tree State officials grapple with the rejection of Healthy Maine, another battle looms. The Healthy Maine Prescriptions program was adopted in part as a response to court challenges to Maine Rx, a prescription drug program adopted by the state–and immediately met with a lawsuit–in May 2000.

PhRMA argued Maine Rx violated the Commerce Clause of the U.S. Constitution. While the District Court agreed, the First Circuit Court of Appeals reversed, finding Maine Rx regulates only in-state activities. PhRMA appealed to the U.S. Supreme Court, which in June 2002 agreed to hear the case. Briefs have been filed, and the case is on the docket for this term.

Conrad F. Meier is managing editor, and Diane Carol Bast is editor, of Health Care News.

For more information …

The full text of the U.S. Circuit Court of Appeals for the District of Columbia’s decision in Pharmaceutical Research and Manufacturers of America v. Tommy G. Thompson is available through PolicyBot. Point your Web browser to, click on the PolicyBot icon, and search for document #11469 (5pp.)

Briefs submitted to the U.S. Supreme Court in Pharmaceutical Research and Manufacturers of America v. Concannon et al. are also available through PolicyBot. Request documents #11470 (PhRMA reply brief, 22pp.), #11471 (amicus curie brief submitted by Pacific Legal Foundation, 37pp.), and #11472 (amicus curie brief submitted by Solicitor General, 43pp.).