Maine Law On Pharmacy Benefits Clears Another Federal Court Hurdle

April 13, 2005

Attorney General Steven Rowe announced today that U.S. District Court Judge D. Brock Hornby has handed Maine an unequivocal win in the case challenging Maine's Unfair Prescription Drug Practices Act (UPDPA). The decision grants the Attorney General's motion for summary judgment and denies 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. U.S. Magistrate Margaret Kravchuk filed a recommended decision in favor of the State in February. Today's ruling adopts Kravchuk's recommendation, finding in favor of the State 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. The decision adopted today 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."

Attorney General Rowe said, "We are very pleased. This is a landmark decision on a landmark law. The State of Maine continues to lead the nation in securing lower drug prices for consumers. Thanks are due to the Maine Legislature and all Mainers who stand behind us in this important work."