New York Times, May 19, 2003Supreme Court OKs Maine affordable drug program
Maine Wins High Court Approval to Seek Lower Drug PricesBy LINDA GREENHOUSE
WASHINGTON, May 19 — Maine's innovative effort to reduce prescription drug costs for uninsured state residents by pressuring manufacturers to grant price rebates received the Supreme Court's qualified approval today in a decision likely to shift the drug pricing debate away from the courts and back to Congress and the executive branch.
The 6-to-3 decision lifted an injunction that has kept the Maine Rx Program from taking effect since the State Legislature enacted it in 2000. The Federal District Court in Portland, ruling in a suit brought by the pharmaceutical industry, had found that the program violated both the federal Medicaid statute and the constitutional proscription against state interference with interstate commerce. The federal appeals court in Boston disagreed, but kept the program on hold until the Supreme Court could rule. Other states have been closely following the Maine case, with 29 states filing a Supreme Court brief on Maine's behalf. As prescription drug legislation has remained stalled in Congress, about half the states have started experimenting with ways to hold down costs for various groups of consumers.
Among these efforts, the Maine program was not only one of the earliest but one of the broadest, because while intended primarily for the state's 325,000 residents who lack medical insurance, it does not make the benefit dependent on financial need.
It places the state in the role of a pharmacy benefit manager and requires drug manufacturers who want to sell their products in Maine to negotiate rebates similar to those the manufacturers have accepted on drugs they sell through the Medicaid program of medical assistance for the poor. Since a state cannot directly impose price regulation, Maine gave the drug companies a powerful incentive to go along: manufacturers that did not cooperate faced having their products subject to a "prior authorization" procedure, under which the state's Department of Human Services would have to approve prescriptions on a case-by-case basis before pharmacies would dispense them.
The federal Medicaid statute permits states to use this procedure, which manufacturers and doctors regard as onerous, for drugs prescribed through Medicaid. The industry alleged in its lawsuit that Maine was making improper use of what was intended to be a limited authority over drug pricing. Maine had not sought federal approval for its program, something the Bush administration emphasized in urging the justices to invalidate it. The court today declined to take that step, instead leaving the next move up to the state and the administration.
"We cannot predict at this preliminary stage the ultimate fate of the maineRx Program," Justice John Paul Stevens wrote in a portion of the opinion that was joined by Justices David H. Souter and Ruth Bader Ginsburg.
In fact, the justices in the majority were united only in the result — to permit the program to go into effect, at least provisionally — while splintering into four separate opinions that did not produce a majority for a rationale.
There was general agreement that the Federal District Court had acted prematurely in granting the injunction in the absence of factual development on what the impact of Maine Rx would be on consumers, both those covered by Medicaid and those who, while "medically needy," were not poor enough to be covered by the federal program. And there was a clear majority to reject that portion of the industry attack that was based on the Constitution's Commerce Clause.
New York Times, May 19, 2003
Ruling May Embolden Other States
By ROBERT PEAR
WASHINGTON, May 19 — The Supreme Court decision today allowing Maineto move ahead with a drug-discount program is likely to embolden other states considering ways to make prescription drugs more affordable to their residents, health policy experts and state officials said.
Prescription drugs account for 11 percent of Medicaid spending, but have become a focus for state cost-control efforts, because Medicaid spending on drugs has been soaring at annual rates of 15 percent to 20 percent for the last several years.
Richard Cauchi, a health policy specialist at the National Conference of State Legislatures, said that 18 states were considering legislation to mimic the Maine Rx law, under which Medicaid discounts are offered to state residents not eligible for Medicaid.
The 18 states are Colorado, Florida, Georgia, Indiana, Mississippi, Missouri, West Virginia, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Rhode Island, Tennessee, Texas and Vermont.
Dozens of states, squeezed by soaring health costs and declining revenue, have cut Medicaid benefits and restricted eligibility. Over strenuous protests by the drug industry, states have also taken steps to rein in pharmaceutical costs: expanding the use of generic drugs, requiring drug makers to pay additional rebates, requiring doctors to get approval from a state agency before prescribing certain medicines.
Today's Supreme Court ruling, though preliminary, accepts several of the arguments made by states in defending these cost-control measures. The court accepts Maine's argument that some low-income people will be kept off Medicaid if they have access to discounted drugs. The court also accepts the contention that "prior authorization" requirements may help save money for Medicaid without harming beneficiaries.
To protect themselves from legal challenge, states may wish to establish stricter eligibility rules, so drug discounts are available to people of low and moderate incomes, not to higher-income residents, state officials said.
Associated Press, May 19, 2003,
Maine Wins Supreme Court OK to Seek Lower Drug Prices
By ANNE GEARAN, Associated Press Writer
WASHINGTON - The Supreme Court on Monday gave a green light to a novel state program to force drug manufacturers to lower prices on prescription drugs, but warned that the program may not survive further court challenges.
The 6-3 ruling was a defeat for drug makers who claimed that Maine's program, called Maine Rx, exceeded the state's power to tinker with drug benefits under federal Medicaid law.
The program, which has never taken effect, would use the state's buying power under Medicaid to negotiate bulk discounts from drug companies. The state claims the plan would cut drug prices by 25 percent for the working poor, retirees and others who do not receive health coverage or drug benefits through their jobs.
The Supreme Court's ruling does not give Maine what it really wanted, an unqualified endorsement of the drug plan. Instead, the high court said that drug makers did not adequately show why the plan should be prevented from taking effect. It has been on hold pending the court fight. "By no means will our answer to that question finally determine the validity of Maine's Rx program," Justice John Paul Stevens (news - web sites) wrote for the court.
Only Justices David Souter (news - web sites) and Ruth Bader Ginsburg (news - web sites) fully agreed with Stevens' analysis of the potential benefits of the Maine program, but an additional three justices agreed that the program should have a chance to take effect.
Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor (news - web sites) and Anthony Kennedy (news - web sites) dissented on that point. They would have left in place a lower court order blocking the program.
Maine Rx, enacted in 2000, would let the state negotiate for lower prices on behalf of more than 300,000 residents who pay for prescription drugs. If prices didn't drop in three years, the state could impose price controls. Spending on prescription drugs has increased by 15 percent or more annually in recent years, and more than two dozen states had urged the Supreme Court to uphold Maine's effort to hold down the escalation. Supporters of the Maine program contend it is a response to years of inaction in Congress, which has repeatedly tried and failed to add prescription drug coverage to the federal Medicare program for the elderly.
Sen. Olympia Snowe (news, bio, voting record), a Republican from Maine, said she hoped the ruling would push Congress to finally resolve the prescription drug impasse. "This decision is a victory for consumers who deserve access to more affordable prescription drugs," Snowe said. Labor and retiree groups support the Maine approach. Twenty-eight states supported Maine's position. A dozen states had said they were poised to adopt similar laws if the Supreme Court ruled in Maine's favor. Ray Simpson, 76, of Saco, Maine, said the Supreme Court ruling was a relief. He said he retired in December and learned the hard way the costs of paying out-of-pocket for prescriptions. "It was unbelievable when I had to pay my first prescription," Simpson said. His prescription for Lipitor (news - web sites) went from $20 for a 90-day supply to $98 for a 30-day supply. "You have to pay through the nose." Simpson's wife, Carleen, was just diagnosed with breast cancer (news - web sites) and learned she must pay $210 a month for a new prescription. Carleen Simpson plans to get the prescription filled in Canada, he said.
The Bush administration had urged the court to block the law. Business groups and conservative legal organizations sided with the drug industry. Some justices had suggested in January, when the case was argued, that the dispute be resolved by a lower court or by the federal Department of Health and Human Services (news - web sites), which oversees Medicaid. Medicaid, a joint program of the federal government and the states, funds health care for the poor and disabled. The Supreme Court left the door open for either step.
State officials have said the program simply does for one state what other countries have done for all their citizens — force the drug companies to bargain. Prescription drug prices are often much lower in Canada, in part because of government price caps. The case is Pharmaceutical Research and Manufacturers of America v. Concannon, 01-188.