Maine Wins Again In Court Battle Over Pharmacy Benefits Management

November 9, 2005

Attorney General Steven Rowe announced today that the U.S. First Circuit Court of Appeals yesterday unanimously affirmed the State's lower court win in the case challenging Maine's Unfair Prescription Drug Practices Act (UPDPA). The Pharmaceutical Care Management Association (PCMA), the national trade association representing pharmaceutical benefits management companies (PBMs) 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's ruling rejects all of those challenges. The UPDPA has been in operation since April of this year.

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 magistrate in the district court 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, "Once again, the Maine Legislature's innovative work on behalf of prescription drug consumers has triumphed over industry challenges. As long as I hold this office, the Attorney General's Office will fight for affordable prescription drugs for Mainers in any court, for as long as it takes."