A federal appeals court has given Maine permission to go ahead with a controversial state law to control prescription-drug prices, a decision likely to fuel efforts in other states.
The law created MaineRx, a state program that would negotiate for lower prices from drug manufacturers on behalf of residents without prescription-drug coverage, last estimated at 325,000 people. If the program is unable to win significant price concessions by January 2003, the law-signed in May 2000-authorizes state officials to establish mandatory price controls on prescription drugs.
Maine had been blocked from implementing the law by a preliminary injunction issued last October.
Last week's ruling reversing the injunction by the 1st U.S. Circuit Court of Appeals in Boston stunned the pharmaceutical industry but was a huge triumph for Maine. "We scored big time on all accounts," said Kevin Concannon, commissioner of the state Department of Human Services.
Despite the controversy and legal wrangling that has surrounded the law, other states have followed Maine's lead in seeking to reduce the states' and residents' prescription-drug costs. For example, the Texas House of Representatives last month gave preliminary approval to a bulk-purchasing law for prescription drugs that would pool state agencies' negotiating power.
In March, representatives from Alabama, Georgia, North Carolina, South Carolina, Washington state and West Virginia met to discuss regional purchasing cooperatives similar to one proposed last year by three New England states. All told, at least 16 individual states are considering or have passed in recent years some form of prescription-drug price controls, according to the Washington-based National Conference of State Legislatures.
In its opinion, the 1st Circuit quoted late Supreme Court Justice Louis Brandeis as saying: "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 (for) novel social and economic experiments without risk to the rest of the country."
At deadline, it was unclear whether the Pharmaceutical Research and Manufacturers Association, which had sought the injunction, would appeal the decision. The PhRMA, which represents the drug industry, argued that the law violated Medicaid rules and the commerce clause of the U.S. Constitution.
One aspect of the MaineRx program criticized by the PhRMA allows the state to require preauthorization of drugs manufactured by companies that haven't agreed to rebates. "This should be of grave concern to Maine's Medicaid patients since prior authorization can restrict access to medicines," Marjorie Powell, PhRMA assistant general counsel, said in a written statement. "Maine argued that it will use its best efforts to negotiate rebates, that the program is voluntary and that patients will not be hurt by prior authorization. We sincerely hope that the state is true to its word."
In its opinion, the 1st Circuit said it "perceives no conflict between the Maine (law) and Medicaid's structure and purpose. Neither the letter nor the intent of the Medicaid statute prevents states from imposing prior authorization requirements; indeed, they are explicitly permitted."