By Lisa Seachrist

Washington Editor

Maine Gov. Angus King, an independent, signed into law a measure that permits the state to negotiate on behalf of 325,000 state residents for lower prices on prescription drugs.

The measure, enacted late Thursday, came as a surprise to the biotechnology and pharmaceutical industries, which denounced the measure as a price control that will stymie innovation in the state of Maine.

¿Given our conversations with the governor and the fact that he expressed real concern for business, this isn¿t what we were expecting,¿ said Patrick Kelly, director of state government relations for the Biotechnology Industry Organization (BIO). ¿You have to ask, Where is his concern for business now?¿¿

The original proposal would have set up a fair pricing board that would set the price for drugs in Maine. That proposal amounted to an overt price control, and some questioned the constitutionality of the measure. (See BioWorld Today, April 28, 2000, p. 1.)

The newly enacted law would cover all Maine residents who lack prescription drug coverage either because their health insurance plans don¿t include prescription medicines or because they lack health insurance altogether. The program would have the state serve as a pharmaceutical benefit manager by negotiating rebates and pharmacy discounts. Those negotiations will lower the costs of drugs in Maine. The state plans to initiate the MaineRx program in January 2001.

The state hasn¿t fully abandoned the concept of a fair pricing board, however. If, by Jan. 5, 2003, the state determines its efforts as a pharmaceutical benefit manager have failed to deliver prices comparable to the lowest prescription drug prices paid in the state, a fair pricing board will set the maximum prices for prescription drugs in Maine by July 1, 2003.

¿What we¿re doing is using the bulk purchasing power of the state to negotiate the price of drugs,¿ said Dennis Bailey, spokesman for King. ¿It¿s a free enterprise tactic and free enterprise is a two-way street. We also have the stick¿ of a fair pricing board to encourage companies to negotiate with us.¿

Bailey said the anticipated result of the legislation would be that people covered under MaineRx would be able to purchase drugs at the same price the federal government does. He noted the federal supply schedule used in the Medicaid program and for Veteran¿s Administration hospitals offers prices comparable to those found in Canada, where the government controls the price of drugs.

In addition, the law allows the state to assess a civil penalty on manufacturers or distributors charging an excessive price for, or restricting access to, prescription drugs.

The measure, however, is at odds with much of what Maine has been trying to accomplish over the past few years, Kelly said. Maine has a number of incentives for biotechnology companies to locate there. Kelly pointed out that a price control on drugs was perhaps the biggest disincentive to investment in biotechnology.

¿The biotechnology industry is dependent on capital investment,¿ Kelly said. ¿Investors are going to put their money into things like information technology in Maine where there are no price controls on their products. I think companies will look long and hard before locating in Maine.¿

Bailey questions the price control label many are giving the new law.

¿The governor felt strongly against price controls,¿ he said. ¿At the same time, he felt this was an issue that needed to be dealt with. It¿s like we¿re in an airplane with the rest of the world and everybody pays a different price for his seat. If you¿re from the United States [and don¿t have prescription drug coverage] you pay the premium price.¿

Bailey said the governor already has received calls from other states contemplating a law similar to Maine¿s. Vermont¿s legislature is currently considering a similar bill.

Kelly said BIO is trying to prevent similar legislation.

¿We are very concerned about this type of legislation,¿ Kelly said. ¿Ensuring people can afford prescription drugs is very important. What we need to do is to improve access through insurance, not price controls.¿