Stateline Story

Maine Experiments With RX Price Law

There is nothing small about the battle set to begin in a federal courtroom in Bangor. It pits the State of Maine against the multi-billion dollar pharmaceutical industry, and its outcome could affect the price and availability of prescription drugs nationwide.

The Pharmaceutical Research and Manufacturers of America (PHRMA), a trade organization representing about 100 of the largest drug companies, is challenging Maine's first-in-the-nation price-control law for prescription drugs. The law was passed by the Legislature and signed by Independent Gov. Angus King last May.

The industry group is seeking to block its January 1, 2001, implementation.

PHRMA alleges that the "Maine Rx Program" is unconstitutional because it would illegally regulate transactions between manufacturers and out-of-state wholesalers. "We think the courts will agree with us," says PHRMA assistant general counsel Marjorie Powell.

Top Maine officials disagree.

"We have a strong case. The simple fact that they're being very quick to attack the statute doesn't necessarily go to the weakness of the statute. It goes to the extent to which they may be financially harmed if the thing stands," Attorney General Andrew Ketterer told Stateline.org.

Maine Human Services Commissioner Kenneth Concannon calls the industry lawsuit "a major, sort of hysterical overreaction." He expects the program to begin as scheduled, despite the lawsuit. The U.S. Supreme Court is ultimately expected to decide the case.

According to State Senate Majority Leader Chellie Pingree, a Democrat from the island of North Haven who led the legislative effort, the Rx Program is designed to provide low cost prescription drugs for about 325,000 people who are not poor enough to qualify for Medicaid or for Maine's Drugs for the Elderly and Disabled Program, but who don't have some sort of other insurance coverage.

It's a two-stage law: First, Maine will use its position as a bulk purchaser $187 million a year in prescription drugs for those two state programs to obtain lower drug company prices for people who qualify under the new law.

Then, Pingree explains, if drug costs have not been significantly cut by 2003, "we'll use... the power of government to do what has to be done," imposing Legislature-determined price controls on drug companies doing business in Maine. "This is the first example of a state using its market share or its purchasing power to leverage a benefit for other citizens who aren't currently covered," Concannon says. "And I think that is what has the industry so strongly reacting, because if other states imitate Maine and secure better pricing for people without insurance ... it will have an impact on the profit margins of the pharmaceutical industry."

More than 20 other states are debating or are preparing to write legislation similar to Maine's drug prescription law. "There is just huge interest in it," says Pingree. "The political pressure is so strong on legislators that there is not going to be a lot of sitting back and waiting" for the outcome of the PHRMA lawsuit.

Pingree says Gov. King, who has a reputation of making the state business-friendly, "didn't come to the idea of price controls lightly. But he recognized the seriousness of the problem ... that in health care, it's not necessarily a free market system."

Concannon says Maine's new law could be a harbinger of a national approach to drug price policy "sort of like welfare reform."

"I think the states went ahead and did it and showed it could be done, then it became a national law ... Let a few states like Maine demonstrate that this can be done effectively, then I think you'll see Congress willing to move," he says.

Tags: Health