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High Court Reviews Drug
Discounts for Uninsured
By David G. Savage
Los Angeles Times, January 23, 2003
WASHINGTON -- The Supreme Court took up a closely watched case on discount
drugs Wednesday, but most of the justices said they were inclined to turn
the decision over to the Bush administration officials who run the
Medicaid program.
If that happens, it is likely to be several months before the
administration -- or perhaps Congress -- decides whether states can force
drug makers to offer lower prices to uninsured persons as a condition of
selling their drugs through the Medicaid program.
Four years ago, Maine enacted a first-in-the-nation law to do just that.
The pharmaceutical industry sued to stop the law from going into effect,
and the Supreme Court heard arguments Wednesday in the industry's legal
challenge.
"What are you bothering us for?" Justice Antonin Scalia asked
one government lawyer. "If the secretary [of Health and Human
Services] has the power to stop this, why do we have to get
involved?"
Another justice agreed. This "sounds to me like a case that has to go
to the secretary," said Justice Stephen G. Breyer.
Since Medicaid is a joint federal-state program to aid the needy, federal
officials should voice their view on whether Maine's law does that, Breyer
said.
None of the lawyers standing before the justices answered Scalia's
question directly. They were there because the Supreme Court voted to take
the case -- against the advice of the government lawyers.
Last year, U.S. Solicitor Gen. Theodore B. Olson urged the court to stay
out of the Maine case. He said other states were moving ahead with similar
experiments, and federal health officials wanted to examine how the
programs worked in practice.
But the high court ignored his recommendation and voted to take up the
appeal in PhRMA vs. Maine.
At one point, Scalia referred to the Maine plan as a "shakedown"
scheme. If it were approved, he asked, why couldn't state legislators
demand $100 kickbacks from the drug companies?
Maine's lawyer replied the state law was intended to get a better deal for
uninsured consumers, including senior citizens.
"People without insurance are charged more for prescription drugs at
the pharmacy counter," Andrew Hagler, assistant attorney general. If
the law were put into effect, the state would negotiate with drug
companies in hopes of obtaining for these consumers the low wholesale
prices that are paid by the Medicaid program, he said.
But most of the justices said they did not favor allowing the Maine law to
go into effect until the Bush administration's Medicaid office gave it
their approval.
The administration has recently sent conflicting signals on the issue.
In September, the government said Maine's program goes too far because it
is open to all consumers, regardless of their wealth.
Medicaid is supposed to help the poor, yet the Maine program is "not
tailored to serve low-income populations," the administration said.
However, if a state set out to obtain lower drug prices for a
"narrowly defined class of persons" whose incomes exceed the
poverty rate, it could be upheld as a supplement to Medicaid, the
government said.
Maine itself has a second program in the works open to persons whose
income is up to three times the poverty rate.
Meanwhile, Senate Minority Leader Tom Daschle (D-S.D.) and Sen. Debbie
Stabenow (D-Mich.) said they would press to revise the Medicaid law to
clear the way for state programs like Maine's.
"Every state should have the flexibility and the power to be able to
do what Maine would like to do," Daschle said.
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