Remember the MaineRx

Abstract

In 2000, Maine became the first state in the US to enact a law to establish maximum retail prices for prescription drugs for all qualified state residents—MaineRx. The purpose was to lower prescription drug prices for all eligible residents of the state. The state was to have the ability to negotiate manufacturer rebates and pharmacy discounts. Major drug manufacturers, represented by the Pharmaceutical Research and Manufacturers of America, challenged MaineRx in the courts, going to the Supreme Court where it was upheld in 2003. Fifteen other states enacted, proposed, or filed price-control bills in their state legislatures. The result would have been downward pressure on prices outside of the public programs, and the first instance of state-sponsored monopsony power in the US. MaineRx is viewed as one of the proximate causes of the pharmaceutical industry’s successful lobbying effort to implement Medicare Part D in 2004. Medicare Part D is administered through private Pharmacy Benefit Managers (PBMs); it made administration via state government PBMs illegal. The lower prices that could have resulted from MaineRx-type laws did not occur and the magnitude of these reductions is commented upon.