PRICING DRUGS

	January 22, 2003
	The nation's drug manufacturers took their case against the state of Maine to the Supreme Court today. Maine has required that drug companies provide discounted drugs for the uninsured. Margaret Warner follows up with more on today's arguments with the Supreme Court reporter for The Chicago Tribune.

MARGARET WARNER: The nation's drug manufacturers sued the state of Maine over a new law that uses the leverage of the state's Medicaid buying power to force drug discounts for the uninsured. For more on the case and today's arguments, we're joined by NewsHour regular, Jan Crawford Greenburg, she's the Supreme Court reporter for the "Chicago Tribune." So Jan, this program called Maine RX --. JAN CRAWFORD GREENBURG: Right. MARGARET WARNER: How is it designed to work? JAN CRAWFORD GREENBURG: Maine was concerned about the high cost for prescription drugs for the uninsured residents they had evidence that something like 22 percent of the state's residents were not covered by insurance or Medicaid programs so it sought to reduce the cost for prescription drugs for these people. By doing it came up with the program that you mentioned Maine Rx that would essentially coerce the prescription drug companies, the drug manufacturers into cutting their prices for these uninsured residents much as it does for the government in Medicaid or the insurance companies. MARGARET WARNER: So in other words, the state is allowed to and many states do force companies to give discounts for Medicaid recipients? JAN CRAWFORD GREENBURG: That's right. MARGARET WARNER: They wanted to expand that and leverage it to help the uninsured. JAN CRAWFORD GREENBURG: Keep in mind people without insurance pay premium rates for prescription drugs. If you're in an insurance plan or you participate in Medicaid the insurance companies have negotiated with the drug companies these kind of volume discounts. So the insurance companies and the government are actually paying lower prices for prescription drugs than you would pay if you walked into a pharmacy uninsured to get a prescription. The lower court in the case cited one study that shows sometimes uninsured people pay as much as 86 percent more than the insurance companies and the government pay for prescription drugs MARGARET WARNER: As I understand it, the way this would work if it went into effect, if a drug company refused to play ball and to give discounts to the uninsured, it would be harder for them to sell in the Medicaid program? JAN CRAWFORD GREENBURG: That's right. That's where the rub is and that's at the heart of the industry's challenge to this very novel law. To kind of coerce the industry to offer the volume discounts to the uninsured Maine, the state of Maine drew on the Medicaid law. It said look, if you don't offer the volume discounts we're going to impose additional requirements on you. We're going to maybe subject some of your drugs to preauthorization requirements for Medicaid patients, meaning that pharmacies when filling a prescription would have to get additional approval from doctors before they could fill prescriptions for some of those drugs, another hoop to jump through. It could make the drugs less appealing for doctors to prescribe and harder to get MARGARET WARNER: Tell us about what happened in court today. JAN CRAWFORD GREENBURG: The lawyer for the industry went first. He is of course challenging the lower court opinion that upheld unanimously this creative program that Maine has implemented. He argued -- the lawyer for the industry had two main constitutional arguments. Number one he argued that this new program conflicts with federal Medicaid law because it has no -- it doesn't further the purposes of the statute and in fact would hurt Medicaid recipients, making it harder for them to get certain drugs because of prior authorization problem. He argued that it conflicted with the federal law and as a result had to go because of the Constitution supremacy clause -- the federal law, when it conflicts with the state law, must reign supreme. He also had another argument that states were entangling in interstate commerce. The Constitution of course leaves that up to Congress. The court didn't focus that much on the second point but instead focused on whether or not this conflicted with federal Medicaid law and suggested that perhaps the state may have gone too far MARGARET WARNER: Before we get to that, what did the lawyers for the state argue? JAN CRAWFORD GREENBURG: They very persuasively argued, I think, that this didn't conflict with the Medicaid law because in fact it might actually help state Medicaid programs. If we can help people in the front end lowering the cost of prescription drugs, it might also lower the chance they are going to become financially disabled and have to go on to Medicaid at all. They argued strongly that this did not conflict with the federal law and this was well within the state's authority to do. One other attorney went up before the court today, a lawyer for the Bush administration and he took the middle ground and said, yes, maybe this programs goes a little too far because it covers everyone who is uninsured, the rich and the poor, and perhaps if it were more narrowly tailored to apply to the lower income residents, that that would be okay MARGARET WARNER: What the justices say? JAN CRAWFORD GREENBURG: The justices struggled with this one today and really focused on the first constitutional argument of whether or not it conflicted with the federal law. They suggested that perhaps what they need to do is send this back dun to the lower court it's get more input. They were very disturbed that the secretary of the Department of Health and Human Services, which as you know administers Medicaid, had not weighed in this. Justice Scalia, Justice Breyer were very troubled that they didn't realize or didn't know what position HHS was taking and HHS' view on this would be entitled to great deaf deference MARGARET WARNER: Two justices that aren't usually on the same page. JAN CRAWFORD GREENBURG: That's correct. It seemed to be picking up some steam. The lawyer for the Bush administration I think suggested a way for them to resolve this case, which would be to reverse the appeals court decision but leave open the door to the state of Maine to go to HHS get approval for this type of program and take it from there MARGARET WARNER: Was it critical of the state for not getting HHS approval first or critical of the pharmaceutical makers for not going to HHS to appeal? JAN CRAWFORD GREENBURG: A little of both. And the bottom line was they seemed somewhat annoyed that it hadn't been done in the first place. Justice Scalia started off right away with the lawyer for the industry --wanted to know why are you bothering us with this instead of going to HHS. Justice Breyer asked the lawyer for the state why didn't you first get approval before doing this thing that affects Medicaid law - why didn't you go to the Department of Health and Human Services -- the bottom line is I think they would like to try to get that input from the Department of Health and Human Services MARGARET WARNER: Now, I understand there are only 320,000/325,000 Maine residents that fall under the category of the uninsured but not on Medicaid, but this has huge implications nationwide. JAN CRAWFORD GREENBURG: That's right AARP has weighed in on this and is defending efforts by the state and other states across the country to lower prices of prescription drugs. It emphasizes this is a matter of pressing importance for senior members and other states are poised to implement similar programs to address the problem -- particularly in the absence any kind of law from Congress that would somehow cover prescription drugs through say Medicare. MARGARET WARNER: I gather a lot of states weighed in all supporting Maine in essence they have the same leverage and they would like to use it too? JAN CRAWFORD GREENBURG: That's right and as the lower court opinion made it clear it believes state should be able to try the experiments and novel social programs that states or laboratories of democracy MARGARET WARNER: Jan, thanks so much. JAN CRAWFORD GREENBURG: You're welcome.