While Congress dithers, innovative states wanting to find ways to reduce the cost of prescription drugs have taken matters into their own hands. Now, with a major victory in the U.S. Supreme Court for the "Maine Rx" program, other states can get involved -- and put pressure on the federal government to act.
Today's medical advances mean that drugs increasingly treat chronic ailments and other illnesses that in the past might have required long, expensive hospital stays or surgery. Yet many people still do not have drug coverage -- and must either pay out-of-pocket or go without. States bordering Canada, including Minnesota and Maine, have been in the forefront in seeking to reduce prices of prescription medicines for consumers.
Residents of these border states know firsthand that other countries achieve reasonable costs for prescription drugs by negotiating with drug manufacturers -- using the concept of pooling, or "economies of scale" to achieve bargaining power. That's where the Maine model comes in.
The Maine Legislature on a bipartisan basis approved a state-sponsored group purchasing plan in 2000, using the power of numbers to allow Maine residents to wield the same group purchasing power enjoyed by private health maintenance organizations and other large groups.
Not without a huge fight from the drug industry, however.
An association of drug manufacturers challenged the constitutionality of the "Maine Rx" program, claiming the program was pre-empted by federal law and violated the Commerce Clause. The U.S. Supreme Court wasn't buying.
The high court upheld Maine's program that would use the state's buying power to reduce drug prices for the working poor, retirees and others who do not receive drug coverage through their jobs. After two years of limbo, the Maine program can finally get under way -- and other states, waiting to see how the Maine program fared in the courts -- can set up their own large group purchasing pools to lower drug prices.
The larger the buying pool, the greater the bargaining power and the lower the prices for consumers. Under the Maine program, no drug company is required to negotiate discounts with the state, but drug manufacturers have a powerful incentive to participate.
Any drug company that declines to participate is publicly identified and has its products removed from the list of drugs that are automatically approved for use. That company's products are placed on a list of drugs that require "preauthorization" for payment. Doctors and pharmacists, of course, are then likely to favor the automatically approved discounted drugs over the non-discounted drugs that require preauthorization. This is a powerful incentive for drug manufacturers to negotiate discounts with the state. This Supreme Court decision is a huge victory for consumers paying high prices for drugs.
Let the marketplace and the bargaining power of large numbers negotiate fair prices. Other states, including Minnesota, should experiment with similar ideas.
Perhaps after enough states act as "laboratories of experimentation" with large purchasing pools, Congress can get up the courage to establish a truly large purchasing pool at the federal level.
-- Duluth News Tribune
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