Under pressure from Massachusetts businesses, HMOs and consumer groups, Gov. William Weld has vetoed legislation that would have prevented HMOs from excluding any pharmacy willing to accept the going rate for prescription drugs.
The veto was a victory for opponents of so-called "any-willing-provider" laws. Such laws seek to keep medical providers from being left out of selective contracts for goods and services, which are locking up customers and thinning the remaining market for non-network providers.
In vetoing the measure "reluctantly," Mr. Weld said HMOs needed to be free to use market forces to negotiate discounts and bring down healthcare costs.
"The discount prices on pharmaceuticals achieved by managed-care programs are established based on the assumption of a large and identifiable volume of business for the supplier," he wrote in his veto message. "Forcing these managed-care programs to accept pharmaceuticals from any willing provider, even at the discounted price, will result in the evaporation of the targeted volume of business for one supplier upon which the discount price was predicated."
Independent pharmacies had argued they would be put out of business and consumers would be inconvenienced. Mr. Weld said he was "not unmindful of the plight of some independent pharmacies" but had to consider the cost concerns of major consumer and employer groups that opposed the measure.
Among the opponents were the American Association of Retired Persons, Associated Industries of Massachusetts, Massachusetts Business Roundtable, Massachusetts Taxpayers Foundation and the Greater Boston Chamber of Commerce.
Last week, in Boston, the National Governors' Association added its opposition to "any-willing-provider" legislation.
The NGA said the mandates, which are appearing in a number of state legislatures, would severely curtail the ability of managed-care organizations to control costs through negotiating leverage and simplified administration.
In addition, the NGA said managed-care plans would be impeded from impos-ing standards on providers as a condition of participation, which would further quality-improvement efforts.
Although the Massachusetts measure dealt only with pharmacies, other provider groups had similar measures awaiting the outcome of the yearlong legislative battle, said Scott Hartman, a spokesman for the Massachusetts Association of HMOs.
If the law had been enacted, it would have left the Statehouse door open for others like it, he said.