The Maine Rx prescription drug plan and the dormant Commerce Clause doctrine: the case of the missing link[age].

I. INTRODUCTION In the 2002 Term, the U.S. Supreme Court will hear the case of Pharmaceutical Research and Manufacturers of America (PhRMA) v. Concannon,1 in which PhRMA, the plaintiff-appellant, will argue that the State of Maine's program to supply low-cost prescription drugs to its citizens (the Maine Rx Program) violates the dormant Commerce Clause doctrine. After the Program became law in 2000, PhRMA sought and obtained an injunction from a federal district court preventing the law from going into effect. Shortly thereafter, the First Circuit unanimously reversed the district court and lifted the injunction. In June 2002, the Supreme Court granted certiorari.2 This Article argues that the Maine Rx Program violates the dormant Commerce Clause doctrine3 because it links a facially nondiscriminatory tax with a subsidy in a way that, in combination, burdens out-of-state drug sellers. The Supreme Court has found similar programs to be invalid in past cases, most recently in the 1994 case West Lynn Creamery, Inc. v. Healy.4 My analysis contributes to the debate over the Program's constitutionality because the "suspect linkage" argument was not raised by PhRMA, was not addressed in Concannon, and has not been noticed in the extant commentary.5 Viewed from this perspective, it becomes clear that the Maine Rx Program is virtually indistinguishable from similar schemes that the Court has invalidated and that the Court should thus reverse the First Circuit's decision upholding the Program, laudable though its goals might be. Part II describes the origins and operation of the Maine Rx Program. PhRMA's challenge and the First Circuit's decision are described in Part III. Part IV contains a summary of the Court's linkage decisions, concentrating on West Lynn Creamery v. Healy. Part IV also examines a recent article by Professors Dan Coenen and Walter Hellerstein6 that offers a deeper explanation of the Court's decisions in this area. Part V analyzes the Maine Rx Program in light of the cases and Coenen and Hellerstein's criteria for determining linkage, while Part VI considers defenses that Maine may offer. II. THE MAINE RX PROGRAM In 2000, Maine Governor Angus King signed a bill that created the Maine Rx Program.7 The Program sought "to make prescription drugs more affordable for qualified Maine residents, thereby increasing the overall health of Maine residents, promoting healthy communities and protecting the public health and welfare."8 The heart of the Program is a requirement that drug manufacturers and "labelers"9 selling drugs through state-supported programs that supply drugs to needy residents enter into "rebate agreements" whereby the drug sellers pay a certain percentage of instate sales of prescription drugs each quarter back to the State, in essence taxing the sale of those drugs.10 The Commissioner of Maine's Department of Human Services is instructed to obtain a "rebate" better than or equal to that offered by drug sellers to the federal government under Medicaid.11 This de facto tax, in turn, is used to reimburse pharmacies, which, under the statute, agree to sell drugs covered under the rebate agreements to Maine citizens at a discount.12 All "residents of the State who [have] obtained . . . a Maine Rx enrollment card" are eligible as "qualified resident[s]" for the Program.13 The pharmacies are reimbursed by the State for the discounted drugs sold under the Program.14 The reimbursements are to come from the "Maine Rx Dedicated Fund," established by the Program, into which "revenue from manufacturers and labelers who pay rebates," as well as any other appropriations, are placed.15 Figure 1, below, illustrates the structure of the Program. Though "voluntary," those drug sellers who choose not to participate in the Program face two penalties. First, the Program provides for the release of the names of non-participating manufacturers and sellers to the public.16 More importantly, the Program permits, to the extent permitted by federal law, the imposition of "prior authorization" requirements on non-participating manufacturers and sellers17-meaning non-participating manufacturers or labelers have to seek approval from the State before their drugs may be dispensed to Medicaid patients. …