By Lisa Seachrist

Washington Editor

WASHINGTON - Spurred by inaction in the U.S. Congress, legislators, unions and consumer organizations in 20 states have pledged to take action to lower the cost of prescription drugs.

The move comes just five weeks after the state of Maine enacted a measure that permits the state to negotiate on behalf of 325,000 Maine residents for lower prices on prescription drugs. The legislators from the participating states are using the Maine law as a model for measures in their own states.

"This problem-solving approach is sweeping the country state by state," said Ann Beaudry, CEO of the Center for Policy Alternatives, a nonpartisan public policy center working with state legislators. "There is real momentum building. It's an example of good public policy meets good politics - a no-cost solution that will receive very strong public support." The center has posted recommendations and model legislation on its web site at www.state action.org.

The 20 states where the measure has gained support thus far are Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Hawaii, Iowa, Illinois, Maryland, Michigan, Minnesota, Montana, North Carolina, New York, Pennsylvania, South Carolina, Vermont, Washington and Wisconsin.

Ron Pollack, executive director of the non-profit consumer organization Families USA, said the action by the states was necessary to get the U.S. Congress to start moving on the problem of access to prescription drugs rather than using the issue to play politics.

"This action at the state level really constitutes a shot across the bow to the Congress," Pollack said. "It says it's time to quit posturing and take meaningful action."

The pharmaceutical and biotechnology industries view the action as something quite different: price controls. As a result, industry is calling the Maine legislation and the attempts by the other states a serious threat to innovation and capital investment.

"We opposed it in Maine and we oppose it in other states," said Patrick Kelly, director of state government affairs for the Biotechnology Industry Organization (BIO). "We think it will lead to direct price controls. We think if this takes hold around the country, it's going to hurt the biotech industry. We already have a number of venture capitalists saying this is a very disturbing trend."

If biotech companies lose out on venture capital funding because of a perceived inability to recoup investment when a product does make it to market, the industry could lose its main source of funding, Kelly said.

"We have biotech companies in every one of the states considering enacting this legislation," he noted.

The law serving as the impetus for Tuesday's announcement allows the state of Maine to negotiate for all Maine residents lacking prescription drug coverage. Chellie Pingree, majority leader of the Maine Senate and sponsor of the Maine bill, said the measure allows the state to lend its market clout to residents who otherwise pay as much as 50 percent more for drugs than health maintenance organizations or the state's Medicaid Program. Pingree claims the measure uses market forces to help lower the costs for prescription drugs. "If HMOs can do it," she said, "I don't know why we cannot. The idea this is somehow anti-business is baloney.

"It's a good law and a good law with teeth," Pingree said. "We are using our buying power to bring down the cost of drugs. In order to make sure the companies negotiate with us, we say if the cost of drugs doesn't come down by 2003 to within 15 percent of the price the Medicaid program pays, we will enact price controls."

It's the hammer of price controls that has industry upset with the bill. Jeff Trewhitt, media spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA), said, "This is a price control bill, despite what they say. It calls for mandated rebates, and it doesn't address the crux of the problem, which is lack of coverage."

Trewhitt said the industry supports a national remedy, not a state-by-state approach. The plan favored by both PhRMA and BIO is a national program providing affordable access to private-sector drug coverage under Medicare, including a stop-loss provision to ensure the sickest patients with the highest bills have the medicines they need.

Trewhitt added that PhRMA has significant concerns about whether the legislation is even constitutional. PhRMA has retained lawyers in Washington and Maine to explore the issue.

Pingree said the state anticipated such a move and has set aside funds to fight any lawsuits.