Court gives Maine go-ahead to try to lower drug prices

WASHINGTON -- The Supreme Court dealt a defeat to the drug industry Monday, ruling that a state may try to force companies to lower prices on prescription medications for the poor and uninsured.

The court's 6-3 decision would let a novel program take effect in Maine, where supporters say it would cut prices by 25 percent and help more than 300,000 residents.

Justices stopped short of any broad endorsement of the merits of Maine's plan. The ruling said only that drug makers did not adequately show why the plan should be blocked.

"By no means will our answer to that question finally determine the validity of Maine's Rx program," Justice John Paul Stevens wrote for the court.

Nationwide, drug prices have been rising by double-digit percentages every year. A dozen or more states have been poised to follow Maine's lead with similar programs, and more than two dozen backed Maine on the Supreme Court case.

Maine Rx, as the program is known, was approved by the legislature in 2000. It would use the state's buying power under the federal Medicaid program to negotiate bulk discounts from drug companies.

The state says the program is intended to help the working poor, retirees and others who do not receive health coverage or drug benefits through their jobs. If prices didn't drop in three years, the state could impose price controls.

Drug makers said the state plan holds them hostage, and fought a three-year federal court battle to stop it. Opponents said the program is unconstitutional and violates federal Medicaid law.

That battle probably is not over, as the Supreme Court ruling made clear. Future court challenges could again stop the program, or the Bush administration could move to block or modify it.

Some justices had suggested in January, when the case was argued, that the dispute be resolved by a lower court or by the federal Department of Health and Human Services. HHS oversees Medicaid, a joint state-federal program that finances health care for the poor and disabled.

The Supreme Court left the door open for either step.

Still, the ruling may guide states toward a way to handle a problem that persists despite repeated pledges from both political parties and the White House to fix it.

After Monday's ruling, supporters and opponents of the Maine program said Congress should fix the problem nationwide by paying for prescription drugs for elderly people under the separate Medicare insurance program.

Maine Gov. John Baldacci said the state will go ahead with the program soon. Maine officials said the program simply does for one state what other countries have done for all their citizens, which is to force the drug companies to bargain. Prescription drug prices often are much lower in Canada, in part because of government price caps.

Paulette Beaudoin, 69, of Biddeford, Maine, suffers from chronic pulmonary disease, arthritis, osteoporosis and emphysema. She takes 14 prescription medications and estimates she saved $5,000 last year by buying her drugs in Canada. She blames drug companies for keeping prices high in the United States.

"I've been saying it all along: I should never have had to leave my country to buy medicine to keep me healthier," she said. "This never should have happened, and it still shouldn't be happening."

Marjorie Powell, spokeswoman for the drug industry group that sued over the Maine program, said it is too soon to tell what effect the court ruling will have.

"There are better answers than the one Maine offers," Powell said. The Pharmaceutical Research and Manufacturers of America claims Maine's approach would prevent some patients from getting the specific drugs they want if the state determined those drugs cost too much.

Only Justices David Souter and Ruth Bader Ginsburg fully agreed with Stevens' analysis of the potential benefits of the Maine program, but Justices Antonin Scalia, Clarence Thomas and Stephen Breyer agreed that the program should have a chance to take effect.

Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor and Anthony Kennedy dissented on that point. They would have left in place a lower court order blocking the program.

The Bush administration had urged the court to block the law. Business groups and conservative legal organizations sided with the drug industry.

The case is Pharmaceutical Research and Manufacturers of America v. Concannon, 01-188.

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