Healthy Skepticism Library item: 17922

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Publication type: news

Hallam K
Drugmakers to Oppose Maine Discount Law at U.S. Supreme Court
Bloomberg News 2003 Jan 21

Full text:

Drugmakers will ask the U.S. Supreme Court tomorrow to throw out Maine’s effort to make them finance lower-priced prescription drugs for the uninsured.

The law, the first of its kind, would use the state’s Medicaid program for the poor as a lever to encourage drugmakers to fund discounts for up to 325,000 people who lack insurance. At least 20 states have enacted or are considering similar laws, said Kevin Concannon, Maine’s commissioner of human services. The law is on hold during the court dispute.

Maine argues it has the authority to enact the plan to relieve what it calls ``price discrimination’‘ against the uninsured. Drugmakers that sued to overturn the program say it unlawfully burdens Medicaid patients to gain discounts for other people who aren’t poor enough to qualify for Medicaid.

``You’re using a law that’s not intended to help the middle class, to help the middle class,’‘ said Ira Loss, an analyst with Washington Analysis who has followed drug policy issues for three decades. ``If the law is upheld, other states will copy it. The drug industry wouldn’t be very happy about that.’‘

Spending on drugs rose 17 percent in 2001, the most recent year for which figures are available. The 27 top-selling drugs, including Pfizer Inc.‘s cholesterol drug Lipitor and Merck & Co.‘s pain medication Vioxx, accounted for more than half the increase.

The 1st U.S. Circuit Court of Appeals upheld the Maine Rx program, which is intended to benefit people who have no public or private insurance coverage and must pay cash for drugs.

Individuals don’t have the clout to negotiate the discount prices that insurance companies receive for their patients, the state says.

25 Percent Discount

Concannon said the state hopes to negotiate discounts of about 20 percent to 25 percent, while the patient would pay the rest of the drug’s cost. There would be no income limit on people permitted to buy the discounted drugs.

If pharmaceutical companies refused to finance the discounts, Medicaid patients would have to get prior authorization from the state before receiving prescriptions for drugs made by those companies.

Marjorie Powell, senior assistant general counsel for the Pharmaceutical Research & Manufacturers of America, which sued to overturn the Maine law, said the law is ``harmful to Medicaid patients’ health care.’‘ Her group represents drugmakers including Bristol-Myers Squibb Co., GlaxoSmithKline Plc and AstraZeneca Plc.

``The harm to pharmaceuticals is the potential that patients will be denied access to an individual company’s drugs,’‘ Powell said.

The pharmaceutical group says the law violates the federal Medicaid law by interfering with Medicaid patients’ ability to get drugs, and that it unconstitutionally restricts interstate commerce.

Bush Administration

Medicaid is the government health insurance program for the poor. The federal government pays about half of Medicaid’s costs.

Each state runs its own Medicaid program within federal guidelines.

Concannon said the Maine program would reduce Medicaid costs because if uninsured people are able to get the drugs they need ``it will reduce the likelihood that they will have to turn to the government for their complete health costs.’‘

The Bush administration is supporting the drugmakers, arguing in a friend-of-the-court brief that states can’t use Medicaid prior-authorization rules to advance goals unrelated to Medicaid.

Also supporting the pharmaceutical companies’ appeal in court briefs are the U.S. Chamber of Commerce and the Long Term Care Pharmacy Alliance. Maine is backed by the National Conference of State Legislatures and the National League of Cities.

Healthy Maine Program

After lower courts put the Maine program on hold, the state enacted a similar law called the Healthy Maine Prescription Program. That program, which included a 2 percent state subsidy and placed an income limit on those eligible to buy discounted drugs, was struck down in December by the U.S. Court of Appeals for the District of Columbia.

Last year Congress failed to enact legislation expanding coverage of prescription drugs by Medicare, the U.S. health insurance program for the elderly and disabled. Under a House proposal, the U.S. government would have paid the drug bills of patients eligible for both Medicare and Medicaid, easing the burden on the financially struggling states.

The justices are expected to issue a decision by the end of June. The case is Pharmaceutical Research & Manufacturers Association v. Concannon, 01-188.