Another Maine Prescription Drug Law Survives Industry Challenge

February 3, 2005

Attorney General Steven Rowe announced today that U.S. Magistrate Judge Margaret Kravchuk has handed Maine a win in a recommended decision in the case challenging Maine's Unfair Prescription Drug Practices Act (UPDPA). The decision recommends that the U.S. District Court for Maine grant the Attorney General's motion for summary judgment and deny the motion for summary judgment filed by the Pharmaceutical Care Management Association (PCMA), the national trade association representing pharmaceutical benefits management companies (PBMs). PCMA sued Attorney General Rowe in 2003 alleging that the UPDPA is preempted by federal law; that it would effect a regulatory taking of trade secrets, revenues, and contractual rights; that it violates PBMs' civil rights; and that it is unconstitutional for violations of due process, the Commerce Clause, and freedom of speech. Yesterday, after more than a year of intense litigation between industry lawyers and the Attorney General's Office, U.S. Magistrate Margaret Kravchuk found in favor of the Attorney General on all claims.

The UPDPA requires PBMs to disclose to health plans any conflicts of interest, side payments from drug companies, and details about drug switching programs. These requirements are described generally as promoting "transparency" in the PBM industry, that is, they allow the health plan clients of PBMs to see through the otherwise secret arrangements that PBMs had with other market players. Yesterday's decision summarized the PBM industry in these words: "[A]lthough PBMs afford a valuable bundle of services to benefits providers, they also introduce a layer of fog to the market that prevents benefits managers from fully understanding how best to minimize their net prescription drug costs." (at page 5)

Attorney General Rowe said, "The persistence and patience of Maine people have been rewarded for the second time in a week. Last Friday's favorable decision on Maine Rx Plus and yesterday's decision on the Unfair Prescription Drug Practices Act both vindicate our long-standing support for efforts to reduce prescription drug prices. Maine leads the nation in these efforts. Maine people know that the first person down a trail has to expect to clear a few trees. I'm thrilled to report that we are clearing the trees laid in the trail by the drug industry and that the trail does lead to lower prices for prescription drugs. Thanks to all people of Maine who stand behind us in this important work."