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Pharmaceutical Group Sues Maine for Price Control Law A drug manufacturers' group has filed suit challenging Maine's new law that would institute price controls if the state cannot negotiate substantial discounts on prescription drugs-an issue of great importance to seniors. Earlier this year, Maine became the first state in the nation to enact a law aimed at pushing drug companies to lower retail prices up to 40% by October 2001. The pharmaceutical industry is seeking to block the Maine legislation from taking effect until a constitutional challenge is heard. The legislation would enable the state to negotiate for lower prices on behalf of more than 325,000 residents who do not have prescription drug insurance. Maine hopes to obtain substantial discounts from suppliers, similar to those provided to other large purchasers, then pass the savings on to consumers. If negotiations fail to reduce prices, Maine could impose price controls within three years. The drug industry group charges that the Maine statute interferes with the federal Medicaid program, violating a constitutional prohibition against states making laws that conflict with federal law. Pharmaceutical giant SmithKline Beecham recently announced it would no longer ship to Maine. Maine officials charged that SmithKline was dodging the new drug discount law. Similar bills are developing in many other states. Lawmakers from New England, New York and Pennsylvania are discussing banding together to force manufacturers to lower prices. They point to a Boston University professor's report that suggests that legislation requiring drug makers to slash prices would result in increased purchases by consumers and therefore would not cut into the drug manufacturers' profits. According to the report, drug manufacturers will be paid $18 billion for brand name prescription drugs by private insurers, government programs, and residents of the eight Northeast states. A combined $6.5 billion could be saved in the Northeast alone during the first year by forcing drug makers to offer prescription drugs at the same lower prices paid by the federal government, the report said. Source: "U.S. States, Companies At War Over Drug Prices," David Brinkerhoff, Reuters, July 5, 2000. "Maine Claims SmithKline Dodging Drug Discount Law," Reuters, August 4, 2000. "Prescription Drug Prices Discussed," Michael Mello, The Associated Press, August 7, 2000. "Group Sues Maine On Drug Price Law," Francis Quinn, The Associated Press, August 8, 2000.
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