Courting Big Phrma

So far, it's Maine, zero; the Pharmaceutical Research and Manufacturers of America, two. The state's two attempts to pressure drug companies to extend lower Medicaid prices for medications to certain non-Medicaid recipients have been turned back by the courts.

But the legal tide may be turning for government attempts to lower drug prices in their jurisdictions. For starters, other states are beginning to have better luck when PhRMA has taken them to court. In a particularly important ruling last December, a Michigan appeals court upheld that state's aggressive drug-price-reduction plan. The plan created a preferred drug list consisting of "best in class" products for Medicaid beneficiaries and required drug manufacturers whose products had not been placed on the list to pay supplemental rebates in order to be included. Last September, an advisory letter from the U.S. Department of Health and Human Services to state Medicaid directors endorsed the practice in principle as well.

Other dynamics in the legal battles between states and PhRMA are evolving, as well. After years in the courtroom as defendants, state attorneys general are now taking the offensive with a wave of lawsuits intended to roll back drug costs. Several states--California, Minnesota, Nevada, New York and Texas, among them--have filed lawsuits challenging the legality of drug company arrangements that give pharmacies and doctors financial incentives to prescribe their products. States are also taking a hard look at the pharmacy benefit managers that administer state health programs.

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