One of the world’s largest prescription drug makers is suing the state of Maine over a new law intended to protect a federal drug discount program.
Novartis, a multinational pharmaceutical corporation based in Switzerland, filed the lawsuit against Maine Attorney General Aaron Frey on Aug. 7 in U.S District Court in Maine.
In its complaint, Novartis argues that the new Maine law doesn’t protect patients and hospitals, as it claims to do, but rather a growing sector of middlemen who profit off the federal 340B Drug Pricing Program.
The 340B program requires pharmaceutical companies that participate in Medicaid to give a discount on outpatient drugs to health care organizations that serve low-income or uninsured patients. This includes federally qualified health centers, of which Maine has around 20.
The Maine law, “An Act to Protect Health Care for Rural and Underserved Areas by Prohibiting Discrimination by Participants in a Federal Drug Discount Program,” was originally introduced by Sen. Donna Bailey, D-York, as LD 1018 and was passed as part of the state’s biennial budget in June.
The law, which takes effect Sept. 24, prevents drug makers from forcing hospitals and federally qualified health centers to enter into partnerships that don’t offer the 340B program, according to Bailey. The law also bars insurance companies from reimbursing participating institutions at a lower rate.
Novartis’ complaint rests largely on the protections extended to third-party “contract pharmacies” that dispense drugs on behalf of hospitals and clinics.
While contract pharmacies are permitted under the federal program, Novartis claims in its lawsuit that the covered providers have no obligation to pass on the savings to their patients, and in practice they generally don’t.
“Instead, they bill insurers and government payors for the full price of the drug and pocket the difference,” Novartis wrote in its complaint. “The purported ‘patients’ often do not know they have ‘participated’ in the program at all. In short: The only beneficiaries of contract pharmacy arrangements are covered entities, contract pharmacies, and the third-party administrators who service them.”
Under the new Maine law, Novartis said nothing will change about the delivery of drugs, which will be sold in the same quantities at the same pharmacies to the same patients. The only difference will be the profits reaped by those who know how to work the federal program to their own advantage.
The corporation also claims the Maine law would create an overlay of new rules that would complicate the administration of a program that is supposed to be entirely under the jurisdiction of the federal government. However the Maine law includes language forbidding conflicts with federal law.
Sen. Bailey in a statement on the Novartis lawsuit accused “Big Pharma” of trying to “increase their own profits at the expense of health care providers and the patients who rely on these essential cost-saving programs.”
The new law in Maine and the lawsuit challenging it echo similar battles around the country in recent years, as pharmaceutical makers have pushed to limit the federal drug discount program, while states have enacted a variety of laws nominally to safeguard it.
