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High Court Allows State Discount Drug Program

BY Admin  May 19, 2003 at 2:50 PM EST

The program, called Maine Rx, allows the state to negotiate bulk discounts with drug companies for Maine’s working poor and other uninsured residents in the same way the manufacturers do for the government-run Medicaid program or for insurance companies.

The program, enacted in 2000, was designed to help the estimated 325,000 Maine residents who are not covered by Medicaid or insurance and subsequently forced to pay as much as 86 percent more for their 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,” Jan Crawford Greenburg, Supreme Court reporter for The Chicago Tribune told the NewsHour after the case’s argument session in January.

“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,” she said.

In order to ensure the cooperation of drug companies in the price cuts, the state used a provision in federal Medicaid law that allowed it to impose prior authorization requirements on certain drugs, making them less appealing for doctors to prescribe and more difficult for patients in the Medicaid program to obtain.

The program has not yet gone into effect due to the court challenge by the Pharmaceutical Research and Manufacturers of America, a drug industry group.

The high court’s ruling will allow the law to take effect, but did not give it a full endorsement, leaving the final legal fate of the program unclear. The success of such a program could have major implications nationwide where an estimated 70 million Americans lack government or private insurance coverage for prescription drug costs.

“By no means will our answer to that question finally determine the validity of Maine’s Rx program,” Justice John Paul Stevens said for the court majority.

The 6- 3 ruling is considered a temporary setback for drug manufacturers, who had argued that the program conflicted with federal Medicaid provisions and violated the Constitution by interfering with interstate commerce.

“At this stage of the litigation, petitioner [the drug industry] has not carried its burden of showing a probability of success on the merits of its claims,” Stevens wrote in a ruling that split on some points of the complex legal questions involved in the Maine program.

Justices David Souter and Ruth Bader Ginsburg agreed with Stevens’ view of the benefits of the Maine program and another three justices agreed that the program should be allowed to take effect.

Chief Justice William Rehnquist and Justices Sandra Day O’Connor and Anthony Kennedy dissented on the decision to allow the program to move forward. They would have left in place a lower court order blocking the program, according to an Associated Press analysis of the decision.

Twenty-eight states, as well as several retiree and labor groups, supported the Maine program. Business groups and the Bush administration backed the drug industry in the challenge.