NCPA - National Center for Policy Analysis

Drug Price Controls are not the Cure

May 21, 2003

The U.S. Supreme Court on Monday gave Maine a tentative green light to proceed with a controversial drug-discount scheme that is a backdoor route to price controls and rationing, a la Canada and Europe, say observers. The Court didn't endorse the program, so much as say it wasn't its job to stop it.

In short, the 6-3 decision puts responsibility for the plan back with the Maine politicians who devised it.

  • Under the program, called Maine Rx, the state takes on the role of drug dispenser for anyone who lacks coverage.
  • It then requires drug makers to give it the same rebates that companies already give for Medicaid drugs -- about 20 percent off retail prices.
  • Any company that refuses to play ball will find its products shut out of the significant state-bought portion of the Maine drug market.

In Europe and Canada, government health-care programs long ago became monopoly drug buyers and pushed down prices to 40 percent to 60 percent of U.S. levels. These price controls caused Europe's once-thriving drug industry to wither, or flee to America. U.S. consumers have been subsidizing drug research for the entire world ever since.

Now Maine wants consumers in the other 49 states to foot the bill, while it gets a pass. If Congress and Maine really want to try something innovative, they might get Medicare and Medicaid out of the price-control business, and instead help seniors and the uninsured purchase health insurance packages that include drug coverage.

Source: Editorial, "Supreme Court Rx," Wall Street Journal, May 21, 2003.

For text (WSJ subscription required),,SB105347662957073600,00.html


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