Maine, Ohio leading way in state drug discount plans
By Clea Benson -- Bee Capitol Bureau

August 7, 2005

You can expect to hear a lot about Maine and Ohio in the upcoming special election battle between the pharmaceutical industry and consumer groups over discount drugs for uninsured Californians.

The drug companies, having raised a whopping $72 million so far for their campaign, want to convince Californians to vote for their prescription-discount plan, Proposition 78. They say it is modeled on Ohio's Best Rx, a program that has been operating in that state since January.

Consumer groups say their plan, Proposition 79, is modeled on Maine's year-old program, Maine Rx Plus. Their ballot pamphlet materials quote Maine Gov. John E. Baldacci touting the success of the Maine discounts.

The biggest difference between the two models is their enforcement philosophy. Like Proposition 78, Ohio's plan relies on drug companies to voluntarily discount their products for eligible consumers. Maine's program, like Proposition 79, includes a provision allowing the state to punish firms that don't discount their drugs.

But in practice, neither program stands as a clear model for the initiatives on California's Nov. 8 ballot. The Ohio and Maine programs both have been mired in legal complications that have prevented their full implementation.

And to date, most of the discounts offered in both the Ohio and Maine programs have been coming from pharmacies, not from drug manufacturers.

To understand why the campaigns are making the comparisons to other states, it's useful to know some history: Maine established its program over drug companies' protests, while Ohio worked with drug companies on a compromise program.

In 2000, Maine became a bellwether for states seeking lower prescription costs when lawmakers there approved the first version of their discount plan, Maine Rx. The law included a strong provision that would allow the state to punish drug companies that did not provide discounts by limiting the companies' sales to Maine Medicaid patients.

The Pharmaceutical Research and Manufacturers Association, a trade group whose members include most of the nation's largest drug companies, challenged the program in court.

Meanwhile, consumer activists in Ohio, following Maine's example, tried to put an initiative establishing a similar program on the state ballot there in 2003. PhRMA lawyers challenged the petition drive in dozens of county courts, effectively blocking it.

Finally, the Ohio consumer groups and the drug companies agreed to compromise, crafting the voluntary Ohio's Best Rx program and pushing it through the legislature.

Also in 2003, with their court battle continuing, Maine lawmakers approved a second version of their discount plan, the current Maine Rx Plus. It went into effect in 2004.

A federal appeals court this year allowed the Maine program to stand after the state argued that it had no plan to implement the clause punishing drug companies for failing to provide discounts. Maine officials maintain that they could still choose to enforce that provision in the future if they felt it was necessary.

To date, in most cases, eligible citizens of Maine and Ohio are getting discounts of about 15 percent on brand-name drugs, a price cut provided by the pharmacies that fill the prescriptions.

About 20 drug companies are offering rebates to both states on about 200 different drugs, which enables consumers to get deeper discounts on those products. (By contrast, drug companies offer deep price cuts on about 1,200 different medications through their own private discount programs for eligible consumers.)

Maine has enrolled a higher percentage of qualified state residents than Ohio - about 100,000 participants, out of an estimated 225,000 eligible statewide. In Ohio, about 25,000 people have signed up, out of about 1.2 million eligible statewide.

In both states, officials say they're working to increase participation by drug companies.

"We're in the process of trying to get more rebates," said Dennis Evans, a spokesman for the Ohio Department of Job and Family Services. "Some manufacturers are pretty generous. Others might have just one or two drugs ... that they offer discounts on."

Jude Walsh of the Maine Governor's Office said she expected her state's program to expand.

"I think you start out modestly, and it'll grow," she said.

Jan Faiks, vice president for government affairs and law at PhRMA, said pharmaceutical companies will offer better discounts in Ohio once the program is restructured to meet federal rules and after some other legal technicalities are fixed with legislation.

As for Maine Rx Plus, Faiks said, "it's like an urban myth" that it's similar to Proposition 79, since Maine hasn't threatened to sanction any drug companies yet.

PhRMA and Proposition 79 advocates take differing views on whether the court decision in the Maine case means that states can drop drugs from their preferred lists for Medicaid patients without getting permission from the federal government first. The drug companies say federal permission is required; consumer advocates say it's not.

Bernie Horn, policy director of the Center for Policy Alternatives in Washington, said the fight is one that Californians should be willing to take on. For one thing, he said, California has far more leverage than smaller states like Maine and Ohio.

California's Medicaid program, Medi-Cal, buys $4 billion worth of prescription drugs annually, compared to $1.4 billion in Ohio and $300 million in Maine. With that kind of buying power, California already gets better prices for its Medicaid recipients than most states. And drug companies have far more to lose if their products do not have preferred status here, Horn said.

"If any state can win this fight, it's California," he said. "And the value of winning it is astronomical."

Proposition 78

Proposition 79