WASHINGTON, May 19 (UPI) -- A Supreme Court ruling Monday lets the states force drug makers to extend their price rebates and discounts usually reserved for Medicaid recipients to all patients, at least for now.
The decision, while allowing states to go forward, left the door open to future litigation. And states still may have to get approval from the federal government for such programs.
The ruling came in a case involving a Maine program, but could have an effect on all pharmaceutical prices.
At least 29 other states and Puerto Rico supported Maine's position. And though the case involves drug prices, it was also a test of the states' power to control the quality and price of healthcare across the board.
"The issues posed in this case have significant implications for the states' ability to address the healthcare needs of their citizens, an area of traditional state concern and authority," the states told the Supreme Court in a brief supporting Maine.
In the case before the court, the Maine law tries to "reduce prescription drug prices to the residents of the states."
The Act to Establish Fair Pricing for Prescription Drugs allows the state to impose restrictions on a drug company's participation in Medicaid if a manufacturer does refuses to negotiate with the state to make rebates widely available.
A trade association, Pharmaceutical Research and Manufacturers of America, filed suit in federal court against the law.
The suit contended that the Maine law is an unwarranted state intrusion into the federal Medicaid program, and prohibited by the supremacy clause of the Constitution. The supremacy clause makes federal law pre-empt state law.
It also contended that the state law violates the Constitution's commerce clause, which gives Congress the sole authority to regulate interstate commerce. The state law "burdens" out-of-state drug makers, the association said.
A federal judge issued an injunction against the implementation of the Maine law on both grounds, but a federal appeals court reversed. The appeals court said the impact of the state law on interstate commerce was incidental.
The association then asked the Supreme Court for review.
A divided Supreme Court Monday upheld the appeals court.
In the prevailing opinion, Justice John Paul Stevens emphasized that the court was not ruling on whether the Maine program must receive permission from the secretary of Health and Human Services before being implemented, as required by federal law.
However, the state program is not pre-empted by federal law, Stevens said, nor does it interfere with interstate commerce.
"The Maine Rx program will not impose a disparate burden on any competitors," Stevens said, comparing the Maine program with a state milk price program in another case. "A manufacturer could not avoid its rebate obligation by opening production facilities in Maine and would receive no benefit from the rebates even if it did so; the payments to the local pharmacists provide no special benefit to competitors of rebate-paying manufacturers."
But Stevens left the door open for drug makers to challenge the Maine program on other grounds.
He pointed out that drug makers have "not argued that the court of appeals was incorrect in holding that other factors -- such as the risk of irreparable harm, the balance of equities and the public interest -- do not alter the analysis of its injunction request."
Two other justices joined Stevens's opinion in its entirety; four others joined in significant parts. Justices Antonin Scalia and Clarence Thomas filed concurring opinions agreeing with the judgment, but for different reasons.
Justice Sandra Day O'Connor filed an opinion concurring in part and dissenting in part. She was joined by Chief Justice William Rehnquist and Justice Anthony Kennedy.
O'Connor said there was no evidence or argument suggesting the Maine plan "would achieve cost savings or any other Medicaid-related goal," as required by federal law, and the trial judge acted correctly.
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(No. 01-188, PR&MA vs. Commissioner Concannon)
