Court Rules in Favor of Maine Rx Price Controls

As reported May 17 in the Kaiser Daily Health Policy Report, the 1st U.S. Circuit Court of Appeals in Boston on Wednesday struck down a challenge to a Maine law that would "impose price controls on prescription drugs if pharmaceutical companies refuse to provide a discount for thousands of uninsured residents." Enacted nearly one year ago, Maine's law allows the state to "leverage its buying clout -- $210 million in Medicaid drug purchases -- to negotiate discounted prices" for the 325,000 Maine residents not covered by private insurance or Medicaid. If drugmakers refuse to give the state discounts, the law allows Maine to impose price caps by 2003. The Pharmaceutical Research and Manufacturers of America initially brought a lawsuit against the state, saying that the law is unconstitutional because it violates laws regulating interstate commerce by interrupting relationships between drug manufacturers and distributors (Connolly, Washington Post, 5/18). Last October, a federal District Court judge agreed with the pharmaceutical industry and blocked the program's implementation ( Kaiser Daily Health Policy Report, 10/16/00). In overturning that ruling, the three-judge panel of the circuit court on Wednesday "praised Maine for tackling a vexing problem in a creative way," the Post reports. In a 75-page opinion, the court said, "It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country" (Washington Post, 5/18).

Chellie Pingree, the Maine legislator who "spearheaded" Maine's law, said, "This is a big win. It makes clear that states should be creative and that Maine, specifically, acted appropriately on behalf of citizens who need this benefit." PhRMA spokesperson Jeff Trewhitt said that the organization would file an appeal, adding, "The last thing we need is a patchwork of different state laws. We agree that improved access is important. But this is the wrong way to go. The problem requires a national solution."

More State Action to Come? Twenty-six states are moving forward with plans to create programs similar to Maine's and have watched the Maine case "closely" (Silverman, Newark Star-Ledger, 5/18). Bernie Horn, policy director of the Center for Policy Alternatives, said, "Now that the appeals court has wiped away the stigma of unconstitutionality, we expect the Maine approach to move like wildfire across the country" (Center for Policy Alternatives release, 5/17). Peter Shumlin (D), president pro tem of Vermont's Senate, added, "A number of [states] were waiting for a court decision to see what the future would be for fair-pricing legislation. I'm incredibly happy about the court decision. It gives many of us the green light to move forward."

Alan Sager, a public health professor at Boston University, added that while the pharmaceutical industry has succeeded in "defusing the issue this year by moving it from the legislative arena to the courts," the "pressure is building up." Meanwhile, in Maine, the state is prepared to give cheaper drugs to uninsured state residents beginning next month (Ornstein, Dallas Morning News, 5/18).