Healthy Skepticism Library item: 55

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Rowland C.
High-profile ruling near for Maine, drug firms
The Boston Globe 2004 Dec 11

Full text:

A federal judge in Rhode Island is expected to rule soon in a potentially
precedent-setting case that could limit states’ ability to employ hardball
tactics in price negotiations with drug firms.

US District Court Judge William E. Smith is considering an action brought by
the drug industry four years ago against MaineRx, a groundbreaking drug
coverage plan for Maine residents who lack health insurance.

Under MaineRx, drug manufacturers were asked to provide low-cost drugs to
Maine’s uninsured. If drug companies did not, Maine’s Medicaid system would
remove their drugs from its ‘‘preferred drug list.” That would discourage
doctors from prescribing drugs for the state’s residents who get Medicaid
coverage, which is more than 220,000 people.

The industry filed suit to block the plan in 2000 and after several twists
and turns lost a major round in 2003, when the Supreme Court sent the case
back to the lower courts while upholding the basic concept of MaineRx.
Meanwhile, Maine has launched a modified, voluntary plan that has not been
challenged by the industry.

Nonetheless, the big drug companies have not stopped fighting. They are
seeking a ruling that would require states to seek federal permission before
launching drug coverage plans that use Medicaid as negotiating leverage.

The Pharmaceutical Research and Manufacturers of America, the industry’s
Washington lobbying group that filed the case against MaineRx and has asked
Smith to rule in the industry’s favor, declined to comment on the pending
litigation. PhRMA has said it opposes efforts to use Medicaid recipients as
‘‘pawns” in talks between states and drug firms. It says any measures that
discourage doctors from prescribing certain drugs erode the quality of
healthcare under Medicaid.

The MaineRx case was moved to Providence after a Maine judge said he could
not hear the case because of a potential conflict of interest. Maine has
argued in court that the case should be thrown out because MaineRx as
originally envisioned was never launched and the state has no plans to put
it into motion. Paul Stern, Maine’s deputy attorney general, said the
industry has lost its fight on general principles before the Supreme Court
and should not be pursuing a dispute that is no longer alive.

‘‘What are we doing here?” Stern said in a telephone interview. ‘‘It’s sort
of peculiar.”

But the broader principles at stake are a key issue in today’s climate,
specialists said. Many states have been inspired by Maine’s lead and have
proposed a variety of plans to extend low Medicaid prices to non-Medicaid
populations such as the elderly and pregnant women with no insurance.

‘‘This case is going to be very important for other states that are
interested in driving down healthcare costs and making drugs more affordable
to people that are on the margin,” said Cliff Binder, senior policy
associate at the National Association of State Medicaid Directors.

As a practical matter, states have been seeking federal permission for their
cost-saving innovations. But the point has not been clearly settled in
court. Considering a trend toward creativity in state cost-saving efforts —
and the promise of tight Medicaid budgets in the future — it is more than
an abstract point of law.

Shana Phares, deputy secretary of the West Virginia Department of Health and
Human Resources, said officials in her state are ‘‘closely watching” the
MaineRx case. West Virginia is developing a purchasing pool consisting of
multiple populations, including state employee unions. States need to
protect their ability to wrestle down drug costs for the Medicaid and
non-Medicaid populations they serve, she said.

Vermont, Michigan and a half-dozen other states have formed a multistate
drug buying pact to increase their negotiating power with drug companies.
When it granted permission for the pact, the federal government put limits
on the makeup of buying pools within the individual states. State employees
and school employees were excluded, for example, but pregnant women were
included.