Pharm. Research & Mfrs. of Am. v. Walsh

Pharm. Research & Mfrs. of Am. v. Walsh

Opinion

 [*649]  [**1860]   Justice Stevens announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II, III, and VI, an opinion with respect to Parts IV and VII, in which Justice Souter, Justice Ginsburg, and Justice Breyer join, and an opinion with respect to Part V, in which Justice Souter and Justice Ginsburg join.

In response to increasing Medicaid expenditures for prescription drugs, ¹ Congress enacted a cost-saving measure in 1990 that requires drug companies to pay rebates to States on their Medicaid purchases. Over the last several years,  [****11]  state legislatures have enacted supplemental rebate programs to achieve additional cost savings on Medicaid purchases as well as for purchases made by other needy citizens. The "Maine Rx" program, enacted in 2000, is primarily intended to provide discounted prescription drugs to Maine's uninsured citizens but its coverage is open to all residents of the State. Under the program, Maine will attempt to negotiate rebates with drug manufacturers to fund the reduced price for drugs offered to Maine Rx participants. If a drug company does not enter into a rebate agreement, its  [*650]  Medicaid sales will be subjected to a "prior authorization" procedure.

 [****12]  In this case, an association of nonresident drug manufacturers has challenged the constitutionality of the Maine Rx Program, claiming that the program is pre-empted by the federal Medicaid statute and that it violates the negative Commerce Clause. The association has not alleged that the program denies Medicaid patients meaningful access to prescription drugs or that it has excluded any drugs from access to the market in Maine.  Instead, it contends that the program imposes a significant burden on Medicaid recipients by requiring prior authorization in certain circumstances without serving any valid Medicaid  [***898]  purpose, and that the program effectively regulates out-of-state commerce. The District Court sustained both challenges and entered a preliminary injunction preventing implementation of the statute. The Court of Appeals reversed, and we granted certiorari because the questions presented are of national importance.  [**1861]  536 US 956, 153 L Ed 2d 833, 122 S Ct 2657 (2002).

Congress created the Medicaid program in 1965 by adding Title XIX to the Social Security Act. ² ] The program authorizes federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.  [****13]  In order to participate in the Medicaid program, a State must have a plan for medical assistance approved by the Secretary of Health and Human Services (Secretary). 42 U.S.C. § 1396a(b) [42 USCS § 1396a(b)]. ³ A state plan defines the categories of individuals eligible for benefits and the specific kinds of medical services that are covered. §§ 1396a(a)(10), (17) . The plan must  [*651]  provide coverage for the "categorically needy" ⁴ and, at the State's option, may also cover the "medically needy." ⁵

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