Department enacts drug rebate plan Pharmaceutical firms required to pay state


ANNAPOLIS -- The Maryland health department did by regulation yesterday what the legislature twice failed to do: require pharmaceutical companies to give the state an estimated $2.5 million annual rebate for drugs purchased under programs to help the poor.

Pharmaceutical companies opposed the rebate proposal, which was approved 13-0 by a legislative oversight committee. The companies said it is impossible to estimate the savings because that is a function of which drugs are purchased and their unit costs.

The drug companies argued that the Department of Health and Mental Hygiene lacked authority to initiate the rebate program, especially because the General Assembly twice in the past two years defeated bills to do the same thing.

But before voting, the Administrative, Executive and Legislative Review Committee (AELR) asked for an attorney general's opinion, which concluded the health department did have authority to adopt regulations requiring rebates.

"We felt the rebate was a tax and required an act of the General Assembly," said Daniel T. Doherty, lobbyist for the Pharmaceutical Manufacturers' Association, which represents about 100 makers of patented prescription drugs.

But again, Attorney General J. Joseph Curran Jr. concluded the health department had not usurped the legislature's power to tax.

About 17,000 poor Marylanders receive drugs through a pharmacy assistance program that requires a $5-per-prescription copayment. All 460,000 Medicaid recipients in the state also are eligible for low-cost prescriptions in programs requiring copayment of either $1.25 or $1 per prescription.

"The real issue is whether it sets a bad precedent for the department, twice denied [by the legislature], to come down here with regulations to do the same thing," said Gerard E. Evans, lobbyist for Upjohn, Johnson & Johnson, and two other large drug manufacturers. "I think that's bad public policy."

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