AUGUSTA, Maine -- Supermarket and drug pharmacy retailers in the Pine Tree State are taking the wait-and-see approach regarding the Maine Rx program, a landmark state law being challenged in federal courts that seeks to provide access to affordable prescription drugs for its 325,000 uninsured residents.
The law would permit the state to negotiate rebates with participating drug manufacturers. When wholesalers sell medications to Maine pharmacies, the rebate money from out-of-state manufacturers would go to the pharmacies that sell drugs at lower price points.
The Washington-based Pharmaceutical Research and Manufacturers of America (PhRMA) has maintained its tough stance against the law and the two sides gathered at a hearing in the 1st U.S. Circuit Court of Appeals earlier this month in Boston. PhRMA, which represents 100 drug companies, argued that the law is unconstitutional because it violates the Constitution's interstate commerce clause and the federal Medicaid law.
"The state of Maine is trying to force government-mandated price controls on a competitive marketplace that involves competitive negotiative sales of pharmaceuticals largely outside the state, and that's a violation of the interstate commerce clause," said Jeff Trewhitt, spokesman for PhRMA.
He said requiring prior-authorization of medication for cost or price reasons for those companies who do not go along with the state's mandated rebates is also a violation of the federal Medicaid law.
"Medicines doctors routinely prescribe to Medicaid patients with no problem before, would suddenly have to get special permission from the Medicaid program office to prescribe those medicines," he said. "Prior-authorization is allowed in cases where the patients' safety is concerned, but if it is being done for a cost or price reason, it is a violation."
Other states, particularly ones bordering Canada, are closely watching the case. According to Sen. Peter Shumlin, president of the Vermont Senate and chairman of the Northeast Legislative Association on Drug Prices, an eight-state coalition advocating the law, U.S. pharmacists are losing significant business to Canada.
"Our pharmacists are losing a tremendous number of sales to the northern border," said Shumlin, based in Montpelier. He noted that America is the only industrialized nation in the world that does not regulate drug prices for the entire country.
Retailers and industry observers spoke cautiously about the potentially positive and negative impact the law would have on retail pharmacies, drug distribution and state residents.
Corporate chain officials and various pharmacists at Maine-based supermarkets like Hannaford Bros., Scarborough, Maine, declined to comment or give an opinion to SN. An anonymous pharmacist at a Shaw's Supermarket, Biddeford, Maine, said, "In theory, it makes a lot of sense and I'm for it the way it stands, but I'm not holding my breath."
Scott Burns, a registered pharmacist in the state, said, "I'm watching people pay out the nose [for prescription drugs], so anyone who could receive lower drug costs would be beneficial."
"It may be good in terms of making drugs more affordable and accessible," said Ty Kelley, director of government relations for the Food Marketing Institute, Washington. He said the lowered prices could cause a higher volume of prescription drugs at retail.
Other pharmacists only saw the possible headaches. "It will be good for people, but I don't know how it will be implemented," said one CVS pharmacist. "It could be a lot of paperwork, and hard to keep track." The pharmacist added, "I think it will be a mess."
Chellie Pingree, former Maine Legislature senate majority leader and submitter of the bill, said, "It will be beneficial for senior citizens, more people will be able to access prescription drugs, and pharmacists will be less likely to have unpaid bills [from people who don't pick up their medication because of its expense]." She said participants of the Maine Rx program would carry identification cards with them.
Trewhitt said the law does not solve the pressing problem of aid to the uninsured. "From the vantagepoint of patients, what they're pushing here is a price control mechanism which does not address the crux of the problem: lack of insurance for patients," he said. "Price control does not provide insurance coverage, and that's what people really need." He said a 25% to 40% price reduction would not even assist a poor or modest senior citizen on a fixed retirement income. "So, you haven't accomplished anything."
Phil Schneider, vice president of public affairs for the National Association of Chain Drug Stores, Alexandria, Va., said the legislation only "attempts to address the price of prescriptions, and not the cost of the product." He said the cost of the products will continue to rise due to aging senior citizens, the impact of baby boomers and more effective drugs treating sicker patients.
"The whole health care movement is going towards greater reliance on prescription drugs, and it is a fallacy to think prescription costs will decline," he said.
The Healthcare Distribution Management Association, Reston, Va., which represents drug wholesalers, is concerned about the law's possible effect on drug distribution, referring to manufacturers who said they would potentially pull out of selling their products to in-state distributors and not participate in the program.
David Kosar, director of legislative affairs for HDMA, said, "We're watching it closely. If the federal appeals judge said to go ahead with the program, would other manufacturers react in the same way?" If the manufacturers choose not to sell to in-state distributors, it would limit their product inventory, put out-of-state distributors at an unfair advantage, and drive distribution costs up.
"What affects one distributor can cause a ripple effect," Kosar said.
Trewhitt agreed that many manufacturers disapprove of the law. "Individual companies have made individual decisions that they do not like this approach adopted by the state of Maine, and they're not going to participate."
Alan Meyer, a Rite Aid pharmacist in Portland, said price controls could also hinder development of beneficial pharmaceutical products as well as squelch research and development.
"We've been fortunate to have such great medicine," he said. "It will take manufacturer incentive away."
Backers of the Maine Rx program said pharmaceutical manufacturers are not being oppressed in any way.
"Manufacturers enjoy a generous research and development tax credit, and they have a rather handsome profit margin, from 12% to 15%," said Kelley. "They are the most profitable industry in the world."
Despite the back-and-forth between the two sides, the final decision that will be made by the three-judge panel may not be the end.
"Technically, whoever loses could take this to the U.S. Supreme Court if they wanted to, or they could ask for reconsideration by the entire appellate court," said Trewhitt.