US appeals court bans Vermont Rx drug plan

The US Department of Health and Human Services does not have theauthority to approve Vermont's Pharmacy Discount Program, the US Court of Appeals for the District of Columbia has ruled.

The Program started in January, offering up to 30% drug discounts to state residents who do not qualify for Medicaid. A lawsuit brought against it by the Pharmaceutical Research and Manufacturers of America (Marketletter December 18, 2000) was rejected by a lower court, but the Appeal Court has now said Vermont lacks the authority to offer the same rebates and discounts as those under Medicaid and, as the Program had expended no Medicaid funds and thus produced no Medicaid savings, the DHHS had acted improperly in approving it. Congress is silent on whether the DHHS could extend the rebate without savings to Medicaid, noted Judge David Tatel, adding that "determining how to fund pharmaceutical benefits for the poor and whether their cost should be shared by pharmaceutical manufacturers, is a responsibility that, absent express Congressional direction to the contrary, must be left to Congress."

Vermont Governor Howard Dean, a physician, said the decision was "a big win for the pharmacy companies and a big loss for Vermont's seniors who need medication." He also told Reuters that the companies' action was "just another example of high-handedness and arrogance on their part," adding: "we ought to look at the antitrust implications of their behavior."