Supreme Court Decision on Maine Rx Program Keeps Sick Plan Alive

Published May 22, 2003

Chicago, IL – According to a national think tank based in Chicago, Illinois, this week’s decision by the U.S. Supreme Court to overturn a lower court’s injunction against the Healthy Maine Prescriptions program, or Maine Rx, means a badly flawed program will live to see another day.

Passed in 2000, Maine Rx would require prescription drug manufacturers to pay fees, called supplemental rebates, in order to sell their products to many of the state’s low-income residents. Such rebates are already required from drug manufacturers who want their drugs made available to patients covered by state Medicaid programs.

The Supreme Court on May 19 ruled a preliminary injunction that had prevented the program from being implemented should be lifted while litigation is pursued. The Court did not find the Healthy Maine Prescription program to be valid. It simply sent the case back to a district court for further proceedings.

The Supreme Court also told Maine to submit the program to the Centers for Medicare and Medicaid Services (CMS) for approval. Earlier this year, CMS rejected parts of a similar Michigan proposal because requiring rebates on drugs sold to people outside a state’s Medicaid program exceeds the statutory authority that allows rebates to be required under federal Medicaid laws.

Joseph Bast, president of The Heartland Institute and author of a book on health care reform, says Maine Rx is a flawed approach to making prescription drugs more affordable. “Advocates of the Maine Rx program use the word ‘rebates,’ but in fact they are proposing a tax on prescription drugs sold in the state. Like all taxes, they raise rather than lower the true cost of the drugs, making them less available to those who need them.”

A better way to reduce unnecessary health care spending, according to Bast, is not by government rationing but by systematically reducing government laws and bureaucracies that have “disempowered consumers by putting other people in charge of their health care decisions.”

Across the country, experiments and examples of this alternative reform agenda can be found:

  • Medical Savings Accounts allow patients to immediately pay for prescription drugs and health services, and restore incentives for wellness and price competition in the health care market;
  • High-risk pools, such as those that operate in 31 states, offer subsidized private insurance coverage for people with very high health care costs;
  • Private patient assistance programs operated by such entities as Mature Rx, AARP, Reader’s Digest, and Pfizer, provide significant savings to low-income consumers free of charge, and for very modest annual fees for others;
  • Faster approval of new drugs by the FDA would reduce the cost of new drugs by hundreds of millions or even billions of dollars each year;
  • Medicaid reform along the lines of the food stamp program where participants get a fixed amount of money and are allowed to make their own choices and benefit from being prudent shoppers would provide the vast majority of low-income patients with an incentive to get value for their money;
  • State insurance regulation could be reformed to allow employers to buy personal and portable insurance for their employees, to help avoid the current situation where people become temporarily uninsured when their employment ends.

For additional information from The Heartland Institute on this issue, go to:

For further comment, please contact:

Joseph L. Bast, president, The Heartland Institute 312/377-4000, [email protected]

Merrill Matthews, Heartland Senior Fellow for Health Care Policy 972/713-9849, [email protected]

For further information, contact Heartland Public Affairs Director Greg Lackner at 312/377-4000, 773/489-6447, email [email protected]