Maine Rx Price Controls Violate Medicaid Law

Published November 1, 2002

Maine’s beleaguered prescription drug program is still under fire for violating Medicaid and interstate commerce laws. Although the bill was enacted by the state legislature in 2001, it has not yet taken effect.

The Pharmaceutical Research and Manufacturers of America (PhRMA) filed separate Supreme Court briefs in September 2001 objecting to Maine Rx, the price-controlled prescription drug program meant to address the rising cost of prescription medications.

Under the program, Maine officials would negotiate with drug makers for additional discounts similar to those given to the Medicaid program. Maine was to use the savings to reimburse pharmacies for giving discounts to customers who lack drug coverage. State officials estimate eligible residents would save between 10 and 30 percent on prescription drug costs under the program.

In an effort to encourage drug company participation, the program includes a provision under which doctors would be required to receive prior approval from a patient’s health plan administrator to prescribe medications from companies that are not part of the program.

In 2000, PhRMA filed its first lawsuit against Maine Rx, arguing the state was not authorized by federal Medicaid law to adopt such a program, and that the program represented a “burden on interstate commerce.”

Initially, a federal district court in Maine ruled in favor of PhRMA, but in May 2001 the 1st U.S. Circuit Court of Appeals in Boston overturned the decision and said the program could go forward. Also in May, the Bush administration asked the Supreme Court to reject the PhRMA appeal, but in June the Court agreed to hear the case.

Illegal Program?

In its most recent brief, PhRMA contends Maine Rx violates Medicaid law by making it more difficult for beneficiaries to obtain certain medications. “In effect, Maine is holding Medicaid patients’ prescription drug benefits hostage to the state’s fundraising efforts on behalf of others outside the Medicaid program,” the brief states.

PhRMA also argues the program violates the Constitution’s interstate commerce provisions, which prohibit a state from regulating businesses outside its borders. Under Maine Rx, rebates would be extracted from out-of-state drug companies not conducting business directly with the state, but rather dealing with wholesalers within the state, the brief states.

In its own brief in the matter filed last September, the Department of Justice (DOJ) agrees Maine Rx is illegal, but for a “much more limited reason” than PhRMA asserts. The DOJ said the program is illegal because it is not “specifically targeted to people who are poor or elderly, or who have a different need for help in paying for medicine.”

The White House noted that despite its objections to Maine’s program, it wants to encourage states to continue experimenting with ways to lower prescription drug prices.

“Nobody should say we are supporting PhRMA over Maine,” an anonymous administration spokesperson said, adding that Health and Human Services in October 2001 encouraged states to submit proposals for increasing access to prescription drugs for low-income residents who do not qualify for Medicaid.

The Rx Football

Newsday reports that in Maine’s U.S. Senate race, the issue of prescription drug coverage has played a key role, with Democratic candidate and former State Senate Majority Leader Chellie Pingree making prescription drugs the centerpiece of her campaign platform. Pingree helped write the legislation authorizing Maine Rx and has traveled around the country explaining why similar programs should be implemented nationally.

But incumbent Senator Susan Collins (R-Maine) is working to neutralize the traditional Democratic advantage on health care issues. Collins was placed squarely in the middle of the nation’s health care debate earlier this year as one of the sponsors of Senate-passed legislation (SB 812) that aimed to increase access to generic drugs by using price controls. While the Senate bill failed in the House of Representatives, it remains a meaty issue in the political football game.

The Maine election also has drawn the interest of AARP, the national senior advocacy group, which is spotlighting the race and coordinating events designed to keep citizens focused on the prescription drug benefit.

Conrad F. Meier is managing editor of Health Care News.