A federal judge has ruled that Maine cannot enforce a law that requires pharmacy benefit managers to disclose financial information such as discounts they receive on drug purchases for their members.

Lawyers for Pharmaceutical Care Management Association based in Washington, D.C., had argued the law was unconstitutional and could harm consumers nationally if other states used the law in Maine as a basis for legislation.

“Confidentiality is the key to affordability because that’s what we use to get drug companies to compete with each other, to offer deeper and deeper discounts,” said Mark Merritt, president and CEO of the association.

Pharmacy benefit managers, or PBMs, work on behalf of health insurers, employers and unions to negotiate cheaper prices with drug makers.

The law in Maine requires that they tell their clients about such discounts and rebates, which can be absorbed internally.

The trade group argued that revealing information about discounts and rebates would prevent PBMs from maximizing savings derived from volume purchases.

The group also says the law makes it easier for rival PBMs, drug manufacturers and regulators to get pricing information and essentially weaken their ability to bargain for cheaper prices.

“Basically it was gutting the value of that information to our members,” said Stephanie Kanwic, special counsel to the pharmaceutical association. “You can’t maintain a trade secret under those particular circumstances.”

The court’s ruling filed late Tuesday night stops enforcement of the law, which is among the first state laws of its kind. The association filed the lawsuit challenging the law last year.

State attorneys still contend that the law works as a check on PBMs, which if left alone could keep rebates on drug purchases and garner a profit.

“The legislature had concerns about certain industry practices that were not in the best interest of the plans and the beneficiaries,” said Attorney General Steven Rowe, adding the state intends to defend the law.

Rowe said he was not sure if there would be an immediate appeal of the court’s ruling, but stressed that state officials are examining all option.

“This certainly isn’t the end. It’s just the beginning,” Rowe said.

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On the Net:

Pharmaceutical Care Management Association: http://www.pcmanet.org/

AP-ES-03-10-04 1726EST