- The Washington Times - Thursday, January 23, 2003

The Supreme Court yesterday was asked to strike down a Maine prescription-drug law that Justice Antonin Scalia called a program to "shake down drug companies" by forcing them to sell medicines at discounts to uninsured residents.

"What it does is hold the recipients of Medicaid hostages while it obtains money from out-of-state companies," argued Carter G. Phillips, attorney for the Pharmaceutical Research and Manufacturers of America, which charged that "MaineRx" would unconstitutionally tax interstate medicine sales.

The state law, blocked by an injunction pending the appeal's outcome, restricts drug companies' access to the state if they don't pay rebates or provide lower prescription prices for eligible Maine residents.

The state law follows a philosophy used by some countries, including Canada, whose drug-price caps attract Maine travelers by the busload. If the state law survives high court review, the drug industry expects it will be copied by other states, 28 of which filed to support Maine.

Justice Anthony M. Kennedy called Maine's program "an undue burden on manufacturers."

"People without insurance are charged more for prescriptions than anybody else," said Maine Assistant Attorney General Andrew S. Hagler. He said the law only applies to the 15 percent to 22 percent of the state's population, about 300,000 people who neither have insurance nor are poor enough to qualify for Medicaid.

The court agreed to decide by June if "MaineRx" is constitutional and whether it improperly uses federal Medicaid laws to leverage drug company prices downward.

However, some justices agreed yesterday that perhaps the dispute could be decided not by their sending the case back to a trial court, but by Health and Human Services Secretary Tommy G. Thompson.

"It sounds like a case to me that has to go to the secretary," Justice Stephen G. Breyer said. Among those joining that view were Justices Sandra Day O'Connor and David H. Souter.

"What are you bothering us for? The secretary has the power to stop it," Justice Scalia told Mr. Phillips.

"The court should allow the secretary to review it," Mr. Hagler agreed.

Deputy U.S. Attorney General Edwin S. Kneedler also seconded that notion in his brief argument as a friend of the court.

"We don't think the District Court should decide," Mr. Kneedler said during a brief appearance without declaring support for either side on the underlying issue.

Although he seeks a decision by the justices, Mr. Phillips did not dispute the prospect of an administrative outcome, but he asked that the lower court injunction be left in force "so the unquestioned harms" may not occur during any federal review.

Part of Mr. Phillips' argument aimed at the theory that the state uses its federal Medicaid authority to violate the Constitution's interstate commerce clause, by imposing an extra cost to do business in Maine.

"Maine seizes for itself all the economic benefits and leaves to others the economic burden," he said.

Mr. Phillips argued the law's text makes the benefit available to all Maine residents, not just the needy, and said Medicaid is not intended "to lower health care costs for the Stephen Kings of the world," referring to the novelist who is a Maine native and resident.

"It is intended to lower health care costs for the moderately poor," Justice Breyer said.

Mr. Hagler said the state likely would penalize a drug company only on the product for which it would not reduce prices but conceded under questioning the state could impose restrictions on a company's entire line.

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