Maine Rx Pricing Board Would Use FSS, Canadian Prices As Benchmark

A Maine drug pricing board would use federal supply schedule drug prices and Canadian drug prices to set maximum prescription drug prices in the state under a proposed bill.

The Maine Prescription Drug Fair Pricing Act (LD 2599) would create an 11-member Fair Drug Pricing Board "to establish the price schedule of maximum manufacturer prices for prescription drugs sold in the state after consideration of the prices charged for prescription drugs in Canada, the prices listed on the federal supply schedule," and "any other relevant information."

"The maximum manufacturer price of a prescription drug may not exceed the manufacturer price for that drug sold in Canada," the bill states. If a drug is not sold in Canada, "the maximum manufacturer price may not exceed the maximum price for all other prescription drugs within the same classification of drugs."

Responding to the frequent citing of low drug prices in Canada, the Pharmaceutical Research & Manufacturers of America recently claimed that, without the effects of currency, Canadian prices are only 2% lower than U.S. prices (¹ (Also see "PhRMA Sees Canadian Currency Devaluation As Grounds For Trade Action" - Pink Sheet, 17 Apr, 2000.)).

Wholesalers and retailers would be required to sell drugs at the maximum manufacturer price "plus any reasonable and customary cost of doing business and profit markup."

The board would consist of one state senator; one state representative; three members of the public who represent the interests of senior citizens, disabled citizens and low income citizens; two "members of the medical community," including one nurse; two pharmacists; and the Bureau of Health director and the Professional & Financial Regulation commissioner, both non-voting members.

The board will conduct a semiannual survey, which must include the current maximum prices set by the board, maximum prices for the previous five years at six-month intervals, FSS prices, "the drug formulary maintained by the province of Quebec," and data regarding Maine's elderly low-cost drug program.

Survey results would be publicly accessible through an Internet site maintained by the board.

The board would be allowed to request pricing data directly from manufacturers and "may examine books, accounts and documents of any manufacturer, wholesaler or retailer of prescription drugs."

Manufacturers would be able to appeal the maximum price. Board rulings on appeals could be appealed in state court.

The board would set prices each Jan. 10, beginning in 2001, that would take effect on Oct. 1, "unless by Sept. 1 of that same year the board determines, after a public hearing, that prescription drug prices are less than or equal to the maximum prices...or that alternative non-regulatory mechanisms" have reduced the price of drugs to below the set prices.

Non-regulatory initiatives to be assessed for their effect on lowering drug prices include the Medicaid drug rebate program, the Medicaid elderly prescription drug program, the Maine resident low-cost prescription drug program, the report of the Maine Ambulatory Care Coalition regarding access to lower priced drugs, the physician-directed drug initiative program for Maine Medicaid patients, pharmaceutical manufacturer patient assistance programs and any regional strategies and regional purchasing alliances.

The bill authorizes the board to explore purchasing alliances with other states or Canadian provinces "to ensure uniform prices for prescription drugs."

PhRMA maintained that the bill violates the commerce section of the Constitution, because it would put Maine in a position to control commercial transactions between manufacturers and wholesalers that take place in other states. The association also claimed that if enacted, the bill could result in Maine residents having reduced access to pharmaceuticals.

The bill, introduced by Sen. Pingree (D), was passed for final enactment by the Senate April 13 and by the House April 14. However, Maine Governor King (I) has stated his opposition to government price controls and indicated that he may veto the bill.

The Vermont Senate recently passed a similar drug price control bill (S 300), which is now pending in the House (² (Also see "Pharmaceutical Price Control Bill Moves Through Vermont Legislature" - Pink Sheet, 6 Mar, 2000.)).