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-------- Original Message --------
Subject: qotd: Supreme Court upholds government's right to negotiate
drug prices for all of us (2003 decision)
Date: Wed, 22 Jan 2014 11:19:22 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>
Applied Health Economics and Health Policy
February 2014
Remember the MaineRx
By Robert Kemp
Abstract
In 2000, Maine became the first state in the US to enact a law to
establish maximum retail prices for prescription drugs for all qualified
state residents—MaineRx. The purpose was to lower prescription drug
prices for all eligible residents of the state. The state was to have
the ability to negotiate manufacturer rebates and pharmacy discounts.
Major drug manufacturers, represented by the Pharmaceutical Research and
Manufacturers of America, challenged MaineRx in the courts, going to the
Supreme Court where it was upheld in 2003. Fifteen other states enacted,
proposed, or filed price-control bills in their state legislatures. The
result would have been downward pressure on prices outside of the public
programs, and the first instance of state-sponsored monopsony power in
the US. MaineRx is viewed as one of the proximate causes of the
pharmaceutical industry's successful lobbying effort to implement
Medicare Part D in 2004. Medicare Part D is administered through private
Pharmacy Benefit Managers (PBMs); it made administration via state
government PBMs illegal. The lower prices that could have resulted from
MaineRx-type laws did not occur and the magnitude of these reductions is
commented upon.
Conclusion
Politics play an important role in health policy. In this case,
pharmaceutical companies, represented by the PhRMA, were able to
influence Congress to introduce a national solution to the threat of
state-run PBMs and the negotiation of positive lists. The companies were
instrumental in formulating Medicare Part D and lobbying for its
passage. It is speculated that Medicare Part D came about to put a stop
to state rebate programs such as MaineRx in fear of reduced profits for
the pharmaceutical companies. Thus, Medicare Part D terminated the
existence of state-run PBMs. The historical importance of MaineRx is
that it was an attempt of the state trying to contain healthcare cost
and expand prescription coverage. Had MaineRx been implemented, it might
have been a milestone on the path to reduced healthcare cost.
(Robert Kemp, Ph.D. is Associate Professor, Clinical and Administrative
Sciences, School of Pharmacy, The University of Louisiana at Monroe)
http://link.springer.com/article/10.1007/s40258-013-0076-3
Comment: Government works for the benefit of the people, sometimes. The
government of Maine almost brought under control our outrageous drug
pricing in the United States. The Supreme Court even upheld Maine's
legislation that would do so. But then, with the conservatives in
charge, Medicare Part D was enacted which prohibited Maine or any other
state, or even the federal government itself, from using its monopsony
power to demand fair pricing of drugs by the pharmaceutical firms. This
time the government worked to the benefit of the plutocrats rather than
the people. We have to change that.
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