Court Shoots Down Maine Prescription Med Law

March 11, 2004 ( - A federal court in Maine has put the brakes on sweeping prescription drug legislation in the state, a decision applauded by a pharmaceutical benefit manager (PBM) interest group.

>The US District Court in Bangor found the Maine law – The Act Against Unfair Prescription Drug Practices (LD 554) – in conflict of Employee Retirement Income Security Act (ERISA) provisions.   Specifically, the court found the designation of a PBM as a fiduciary in prescription drug plans to run contrary to ERISA’s intent of keeping health-care benefits affordable by imposing additional rules and regulations.

Under the Maine law, which went into effect September 13, PBMs were required to tell their clients about any discounts and rebates they receive if an entity sues a PBM in Maine.  This represents a departure for the PBM industry, which negotiates with drug makers on behalf of health insurers. That has traditionally kept their discounts secret.   The court found that the disclosure of pricing arrangement in such a circumstance equates to a “taking” of PBM trade secrets.

>In the wake of the court’s decision, the Pharmaceutical Care Management Association (PCMA) – a national association representingPBMs – told other states considering similar proposals to be wary of the potential legal impact.  “In recognizing the central role PBMs play in making prescription drugs more affordable, the Court has the put the brakes on Maine’s head-long rush to legislation,” PCMA President & CEO Mark Merritt said in a news release. “Given that the Maine law would result in higher prescription drug costs for consumers by giving more power to drug manufacturers, the Court’s decision is both prudent and right on target.”

Legal History

The most recent decision came after the PCMA filed suit in the federal court in September of last year (See  PBMs Attempting To Stop Maine Drug Price Disclosure Law ).   However, this case is not stranger to the courtroom. In May, proponents of the state law won a narrow legal victory at the US Supreme Court (See  Maine Drug Law Wins Narrow US Supreme Court Victory ).

The high court said that drug makers, who had been battling to keep the law from taking effect, had not proven their case, a ruling that did not give Maine officials the unqualified court endorsement they had been seeking. The program has been on hold pending the outcome of the court battle.

With the indecisive ruling, the Supreme Court justices warned that the program might not survive further court challenges. Nonetheless, the ruling was a defeat for drug makers who claimed that Maine’s program violates federal law.   “By no means will our answer to that question finally determine the validity of Maine’s Rx program,” Justice John Paul Stevens wrote for the high court.