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Maine price law worries pharmacies and Rx makers

As Maine goes, so goes the nation" has been an oft-repeated adage in Presidential elections, despite the state's mixed record as an accurate forecaster. Now, Maine's first-in-the-nation drug price control law is providing another reason to ponder that old saying.

As originally conceived, the legislation was aimed solely at forcing Rx manufacturers to cut their prices for Maine residents to Canadian levels. That legislation was significantly altered last month in the state legislature's waning days to include pharmacies in the equation. The version enacted into law on May 11 calls for steep rebates from manufacturers. But if they aren't steep enough in three years, it authorizes the state to set maximum Rx prices community pharmacies can charge.

"In the rewrite, retail pharmacies…were told how much to charge, how much profit they could make, and what their reimbursement schedule was," said Robert Nutting, R.Ph., one of a handful of legislators to vote against final passage and owner of True's Pharmacy in Oakland. "It took away all our cash customers.'' Robert Morrissette, R.Ph., president of the 220-member buying cooperative Pharmacy Group of New England, said, "This could put independent pharmacies in Maine out of business."

Chains don't like the new law, either. "Community retail pharmacies are not the cause of the escalating Rx prices…and price controls on pharmacy providers cannot be the solution," said Craig L. Fuller, president of the National Association of Chain Drug Stores. He noted that a better approach was Maine's 1994 law that outlawed discriminatory pricing, but it was not vigorously enforced and was eventually repealed.

The new law sets up the state as pharmacy benefit manager for an estimated 325,000 residents not covered by Medicaid or other third-party Rx insurance. Initially, the state will bargain with manufacturers to get at least the same level of rebates required under federal law for Medicaid—15.1% off the average manufacturer price or the best price given any private customer. Drugmakers that decline to negotiate will be publicly identified and have their Rxs placed on the prior authorization list for Medicaid.

Beginning Jan. 1, participating pharmacies must fill prescriptions for enrollees in the Maine Rx Program for which they'll be reimbursed at the average wholesale price minus 6% plus a $3.35 professional fee and a $3 supplemental fee per prescription. While that doesn't sound bad to start, Nutting doesn't think it will last. "I don't see that supplemental fee ever going up with inflation," he told Drug Topics. And fellow legislators are likely to target the Rx reimbursement down the road, he predicted.

By Oct. 1, 2001, the state is supposed to negotiate manufacturer rebates as good as the discounted prices the Department of Veterans Affairs and other customers on the Federal Supply Schedule receive or a minimum of 24%. The rebates will go into a fund to reimburse pharmacies, pay the fees, and administer the program. After June 30, 2003, Maine can impose maximum retail prices in pharmacies if the manufacturer rebates/discounts are not "reasonably comparable" to what other entities in the state are getting. Recommendations in this and other areas can be made by a 12-member advisory committee that must include two practicing retail pharmacists.

The chains and Rx makers are certain to mount a legal challenge to the new law. "This is a national problem that requires a national solution," said Jeff Trewhitt, a spokesman for the Pharmaceutical Research & Manufacturers of America. "The last thing we need is a patchwork quilt of differing and perhaps conflicting state laws."