In the wake of the Supreme Court decision on Maine’s drug program, states look for direction

Given the complex set of opinions handed down by the U.S. Supreme Court in its 6-3 vote allowing work on Maine’s prescription drug program to continue, states have been forced to try to determine what impact the decision will have on their efforts to control pharmacy costs and to make cost-effective drugs available to those who need them.

While the high court voted to lift an injunction against the Maine Rx program put in place by a federal district court, it did not greenlight the program to begin operations. Instead, it sent the case back to the district court.

Justice John Paul Stevens, who wrote the basic majority opinion, said it was not possible to predict "at this preliminary stage, the ultimate fate of the Maine Rx program." Under the plan, which the state approved in 2000, the state government would negotiate with drug companies for rebates on prescription drugs equal to or larger than those set by federal law for Medicaid. The state intended to pass the rebates on to pharmacies that would use them to fund a discount to state residents without prescription drug coverage, regardless of income. If a drug company would not grant a discount on a particular drug, Maine would require doctors to obtain prior authorization before prescribing that drug to Medicaid beneficiaries.

Soon after the plan was announced, it was challenged in federal court by Pharmaceutical Research and Manufacturers of America (PhRMA), a drug industry trade association. PhRMA said the scheme violated Medicaid law and interstate commerce laws. Its position was upheld by a district court in Maine but overturned by the U.S. Court of Appeals in Boston. The case went to the Supreme Court on appeal. Six of the Supreme Court’s nine justices (Stephen Breyer, Ruth Bader Ginsburg, Antonin Scalia, David Souter, John Paul Stevens, and Clarence Thomas) said the district court should not have issued an injunction blocking the state program. But they reached their decision through differing views. For instance, Mr. Stevens said, "The severity of any impediment that Maine’s program may impose on a Medicaid patient’s access to the drug of her choice is a matter of conjecture." Mr. Souter and Ms. Ginsburg seemed to endorse his view, and Mr. Breyer did so partially. Mr. Stevens concluded that at this stage in the litigation, PhRMA had not carried its burden of showing a probability of success on the merits of its suit.

In another majority opinion, Mr. Thomas wrote he saw "no circumstances under which the Medicaid statute would preempt Maine Rx," and also said that the industry’s legal complaints were "without merit."

Mr. Scalia said PhRMA should have taken its concerns to the Department of Health and Human Services (HHS), rather than pursuing a judicial remedy, while Mr. Breyer said the agency "is better able than a court to assemble relevant facts [for example, regarding harm caused to present Medicaid patients] and to make relevant predictions [for example, regarding furtherance of Medicaid-related goals]."

Mr. Stevens agreed that the case should have gone through HHS, and said, "The issue we confront is, of course, quite different from the question that would be presented if the secretary [of HHS], after a hearing, had held that the Maine Rx program was an impermissible amendment of its Medicaid plan. In such event, the secretary’s ruling would be presumptively valid."

For the minority, Justice Sandra Day O’Connor said the district court had correctly blocked implementation of Maine Rx because its pre-authorization requirement (triggered if a company refuses to provide a discount on a specific drug) would impose a burden on Medicaid beneficiaries. She was joined by Chief Justice William Rehnquist and Justice Anthony Kennedy. But Mr. Stevens countered that the state’s desire to safeguard the health of its uninsured residents "provides a plainly permissible justification for a prior authorization requirement that is assumed to have only a minimal impact on Medicaid recipients’ access to prescription drugs."

Maine Gov. John Baldacci characterized the ruling as "welcome news for Maine. Although more work remains before the benefits of Maine Rx can be realized, this is a very encouraging development." He added the ruling underscores that states can lead the way in health care reform and innovation. He said he would convene the original group that developed the program, and ask its members to work with others to examine the ruling and determine what steps should be taken next. Next steps would be taken under auspices of the Governor’s Office on Health Policy and Finance, he said.

For the drug companies, PhRMA counsel Marjorie Powell stressed that the case was going back to the court that originally ruled the program did not benefit Medicaid patients, and also quoted Mr. Stevens to the effect that the decision does not determine the validity of the Maine Rx program. Ms. Powell said there are key factual issues that still must be decided by the district court. And she pointed to sections in Justice O’Connor’s dissent that said that the district court already had concrete evidence of the burdens that the prior authorization requirement would impose on Medicaid beneficiaries.

"It is important to be clear about the core issue in this case," Ms. Powell said in a statement after the ruling. "Under Maine’s program, government officials, rather than doctors and patients, would effectively decide which medicines will be available for Medicaid and non-Medicaid patients. And government officials will explicitly make this decision based on cost, not what is best for each individual patient.

"There are better answers than the one Maine offers — that is, effectively denying patients the specific medicine they need based on cost — to assuring patients’ access to needed prescription medicines. Real solutions that help rather than hurt patients begin with passing a Medicare prescription drug benefit for seniors and disabled persons this year." She also pointed out that more than 1,400 brand name medicines are available free to needy patients without prescription drug coverage through drug company patient assistance programs.

(Additional information is available on-line from www.hhs.gov, www.ncsl.org, and www.phrma.org. The complete text of the 26-page Supreme Court decision is available at http://laws.findlaw.com/us/000/01-188.html.)