PhRMA seeks to overturn Maine law

Pharmaceutical Representative

The pharmaceutical industry is fighting back against a Maine law that would require the industry to bargain with the state over pricing. The Washington-based Pharmaceutical Research and Manufacturers of America has filed a challenge in the U.S. District Court for the District of Maine, claiming Maine's "Act to Establish Fairer Pricing for Prescription Drugs" is unconstitutional. The law, which was signed by Governor Angus King in May of 2000 and took effect the following August, allows the state to collectively negotiate rebates on drugs from pharmaceutical companies, which would then be sold at lower costs through participating pharmacies. The law also authorizes government price controls if state officials are not satisfied with the price decreases by July 2003.

The pharmaceutical industry is fighting back against a Maine law that would require the industry to bargain with the state over pricing. The Washington-based Pharmaceutical Research and Manufacturers of America has filed a challenge in the U.S. District Court for the District of Maine, claiming Maine's "Act to Establish Fairer Pricing for Prescription Drugs" is unconstitutional. The law, which was signed by Governor Angus King in May of 2000 and took effect the following August, allows the state to collectively negotiate rebates on drugs from pharmaceutical companies, which would then be sold at lower costs through participating pharmacies. The law also authorizes government price controls if state officials are not satisfied with the price decreases by July 2003.

"Taking legal action is not something the association does lightly," said Marjorie Powell, assistant general counsel of PhRMA. "However, the price control law interferes with the nationwide federal Medicaid program in violation of the Supremacy Clause of the U.S. Constitution that prohibits states from making laws conflicting with federal laws, in this case, the federal Medicaid law. The law also violates the Commerce Clause of the Constitution, which prohibits states from regulating transactions outside their borders."

Governor King said he was "disappointed" in PhRMA's legal action and that the state would defend the law appropriately. "After we hear the details of their case, we will assess the merits of the arguments and then vigorously defend the law," said King. "The legislature and my administration worked hard last spring to create a program that would assist our citizens who are overburdened by the cost of prescription drugs. The result, the Maine Rx program, is based on negotiation and cooperation between the state of Maine and the pharmaceutical companies. While this lawsuit runs counter to the productive relationship we hope to have with PhRMA, we have every confidence that the court will rule in favor of Maine's law."

Powell, however, disagreed. "We fully understand the goal of state legislators to ensure affordable prescription medicines for their citizens, but this law is not the solution," she said. "The pharmaceutical industry shares this goal and strongly supports federal efforts to expand access to medicines for seniors across the country."

SmithKline fights back

The PhRMA legal challenge comes only a week after Philadelphia-based SmithKline Beecham announced that it would not ship its drugs to Maine, but would instead ship them to out-of-state wholesalers.

"SmithKline Beecham has simply reconfigured our relationship with our wholesalers, and that's not going to have any effect on the availability or the cost of our drugs up in Maine," said Thomas Johnson, a SmithKline Beecham spokesperson. "We're really doing this to ensure that the residents of Maine still have access to SmithKline Beecham products while we get a chance to study the implications of this law."

In response to the decision, Rep. Jon Baldacci (D-ME) called for a federal review of the SmithKline decision. In a letter to Attorney General Janet Reno and Federal Trade Commission Chairman Robert Pitofsky, Baldacci wrote, "I am deeply concerned that SmithKline Beecham's action is an attempt to bypass a newly-enacted Maine law, and that this precedent could jeopardize future efforts at the state and national level to address prescription drug costs."

Although Baldacci did concede that SmithKline's drugs would still be available to Maine residents, he called for federal assistance in conducting an investigation into the decision. "While Maine pharmacies are expected to have continued access to SmithKline Beecham's products through out-of-state wholesalers, the company's announcement nonetheless appears to represent an attempt to circumvent the state law," Baldacci wrote. "Any guidance that your office can provide will assist Maine, other states and Congress in addressing this critical issue."

Johnson said that SmithKline Beecham supported PhRMA's legal action, but that there was no relationship between it and SmithKline's decision. PR