Pharmaceutical Research & Manufacturers of America v. Walsh

PETITIONER: Pharmaceutical Research & Manufacturers of America
RESPONDENT: Walsh
LOCATION: United States Court of Appeals for the Ninth Circuit

DOCKET NO.: 01-188
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the First Circuit

CITATION: 538 US 644 (2003)
ARGUED: Jan 22, 2003
DECIDED: May 19, 2003

ADVOCATES:
Andrew S. Hagler - Augusta, Maine, argued the cause for the respondents
Carter G. Phillips - Argued the cause for the petitioner
Edwin S. Kneedler - Department of Justice, argued the cause for the United States, as amicus curiae
Sheldon V. Toubman - for Legal Services Organizations Representing Medicaid Beneficiaries as amicus curiae

Facts of the case

In order to achieve savings on Medicaid purchases above federal cost-saving measures, the "Maine Rx" Program reduces prescription drug prices for state residents. Under the program, Maine attempts negotiate rebates with drug manufacturers. If a company does not enter into a rebate agreement, its Medicaid sales are subjected to a prior authorization procedure that requires state agency approval to qualify a doctor's prescription for reimbursement. The Pharmaceutical Research and Manufacturers of America, an association of nonresident drug manufacturers, challenged the program, claiming that it is pre-empted by the Medicaid Act and violates the Commerce Clause. Without resolving any factual issues, the District Court entered a preliminary injunction preventing the statute's implementation, concluding that any obstacle to the federal program's administration is sufficient to establish pre-emption. The Court of Appeals reversed.

Question

Is a Maine statute providing for affordable prescription drugs pre-empted by the Supremacy Clause? Does the statute violate the Commerce Clause?

Media for Pharmaceutical Research & Manufacturers of America v. Walsh

Audio Transcription for Oral Argument - January 22, 2003 in Pharmaceutical Research & Manufacturers of America v. Walsh

Audio Transcription for Opinion Announcement - May 19, 2003 in Pharmaceutical Research & Manufacturers of America v. Walsh

William H. Rehnquist:

The opinion of the Court in No. 01-188, Pharmaceutical Research and Manufacturers of America versus Walsh will be announced by Justice Stevens.

John Paul Stevens:

This case comes to us from the United States Court of Appeals for the First Circuit.

In response to rising Medicaid expenditures in the 1970s and 1980s several States began to experiment what were known as prior authorization programs.

These programs require a State agency to approve a doctor's prescription prior to the prescription being filled in order to get reimbursement under the State's Medicaid program.

Building on the States lead in 1990, Congress amended the Medicaid's statute to grade its on prescription drug rebate program.

One part of its new program allowed States as a condition of coverage of payment for a covered outpatient drug to require approval of the drug before it was dispense so long as two safety requirements are met.

Those requirements that there will be a response by telephone or other communication device within 24 hours of a request per prior authorization, and two, except for certain excludable drugs there is at least 72-hour supply of a covered drug will be dispensed in an emergency situation.

In the year 2000, Maine enacted the Maine Rx Program which is primarily intended to provide discounted prescription drugs to Maine's uninsured resident that is actually opens to all residents of the State.

Under the program, Maine will attempt to negotiate rebates with drug manufacturers to fund a reduced price for the drugs offered to Maine Rx participants.

If a drug company does not enter into a rebate agreement, its Medicaid sales will be subjected to a prior authorization procedure.

After the passage of the statute establishing Maine Rx but before the program actually went into effect, petitioner, an association representing manufacturer's that account for more than 75% of brand name drug sales in the United States, filed suit challenging the validity of the Maine statute.

Petitioner asserted that Maine Rx is preempted by the Medicaid Statute and that it violates a Negative Commerce Clause.

The District Court sustained both challenges and entered a preliminary injunction preventing implementation of the statute.

The First Circuit reversed and we granted certiorari.

In an opinion filed with the Clerk today, we affirm the judgment of the Court of Appeals vacating the District Court's preliminary injunction.

I have filed an opinion in which Justice Souter and Justice Ginsburg join in full, and in which Justice Breyer joins as to all except one part; Justice Breyer has filed a concurring opinion; Justice Scalia has filed an opinion concurring the judgment as has Justice Thomas; Justice O'Connor has filed an opinion concurring in part and dissenting in part in which the Chief Justice and Justice Kennedy have joined.