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UPREME No. _______
I
N
T
HE
S
UPREME
C
OURT OF THE
U
NITED
S
TATES
P
HARMACEUTICAL
R
ESEARCH
&
M
ANUFACTURERS OF
A
MERICA
,
Petitioner,
v.
K
EVIN
C
ONCANNON
, Commissioner,
Maine Department of Human Services, and
G. S
TEVEN
R
OWE
, Attorney General of Maine,
Respondents.
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the First Circuit
P
ETITION FOR A
W
RIT OF
C
ERTIORARI
Kathleen M. Sullivan
559 Nathan Abbott Way
Stanford, CA 94305
Tel: (650) 725-9875
Of Counsel:
Bruce C. Gerrity
Ann R. Robinson
Preti, Flaherty, Beliveau,
Pachios & Haley LLC
45 Memorial Circle
Augusta, ME 04332
Tel: (207) 623-5300
Daniel M. Price, Counsel of Record
Allen S. Rugg
Marinn F. Carlson
Powell, Goldstein, Frazer & Murphy
1001 Pennsylvania Ave. NW
Washington, D.C. 20004
Tel: (202)347-0066 i
QUESTIONS PRESENTED
1.

Whether the federal Medicaid statute, 42 U.S.C. § 1396
et seq., allows a state to use authority under that statute
to compel drug manufacturers to subsidize price
discounts on prescription drugs for non-Medicaid
populations?
2.

Whether a state may circumvent the Commerce Clause
prohibition against regulating or taxing wholly out-of-
state transactions by requiring an out-of-state
manufacturer, which sells its products to wholesalers
outside the state, to pay the state each time one of its
products is subsequently sold by a retailer within the
state? ii
PARTIES TO THE PROCEEDING
The Petitioner is the Pharmaceutical Research and
Manufacturers of America (PhRMA). The Respondents
are Kevin Concannon, the Commissioner of the Department
of Human Services of the State of Maine, and G. Steven
Rowe, the Attorney General of the State of Maine.
Petitioner PhRMA is a not-for-profit incorporated
membership organization. There are no parent corporations
or publicly held companies that own 10% or more of
PhRMAs stock. A list of PhRMAs members may be
found at http://www.phrma.org/who/memlist.phtml. iii
TABLE OF CONTENTS
QUESTIONS PRESENTED ..................................................... i
PARTIES TO THE PROCEEDING......................................... ii
TABLE OF AUTHORITIES .................................................... v
OPINIONS BELOW ................................................................1
JURISDICTION .......................................................................1
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED.....................................................1
STATEMENT OF THE CASE................................................2
I. The Maine Rx Program.......................................................3
II. The District Courts Order..................................................5
III. Proceedings in the First Circuit ..........................................6
REASONS FOR GRANTING THE WRIT .............................8
I. The First Circuits Decision on the Medicaid
Issue Is in Error, and Conflicts with a Decision
of the D.C. Circuit ..............................................................8
A. The First Circuit Erred in Holding that the
Federal Medicaid Statute Allows a State To
Require Manufacturers To Provide Discounts
for Non-Medicaid Populations .....................................8
B. The First Circuits Decision Conflicts with a
Decision of the D.C. Circuit .......................................11
II. The Decision Below Allows the State to
Circumvent the Commerce Clauses Prohibition
Against State Regulation of Wholly Out-of-State
Transactions ......................................................................13 iv
A. The Maine Rx Rebates Regulate Wholly Out-
of-State Transactions ..................................................14
B. The Maine Rx Rebates Are Impermissibly
Tied to Out-of-State Prices .........................................18
C. The Maine Rx Rebates Tax Wholly Out-of-
State Transactions .......................................................19
III. The Statutory and Constitutional Questions Are
of National Importance in Light of Pending
Legislation in Dozens of States ........................................21
CONCLUSION ......................................................................23 v
TABLE OF AUTHORITIES
CASES
American Oil Co. v. P.G. Neil, 380 U.S. 451 (1965) ... 22, 23
Brown-Forman Distillers Corp. v. New York State
Liquor Auth., 476 U.S. 573 (1986) ............. 15, 17, 19, 20
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274
(1977)................................................................ 21, 22, 23
Edgar v. MITE Corp., 457 U.S. 624 (1978) ....................... 18
Healy v. The Beer Institute, 491 U.S. 324 (1989).........passim
Louisiana Dairy Stabilization Bd. v. Dairy Fresh
Corp., 631 F.2d 67 (5th Cir. 1980) ............................... 15
Miller Bros. Co. v. Maryland, 347 U.S. 340 (1954)........... 22
National Bellas Hess v. Department of Revenue of Ill.,
386 U.S. 753 (1967)................................................ 22, 23
Nixon v. Fitzgerald, 457 U.S. 731 (1982)........................... 21
Pacific Gas & Elec. Co. v. State Energy Resources
Conservation & Dev. Commn, 461 U.S. 190
(1983)............................................................................ 10
PhRMA v. Thompson, 259 F.3d 219 (D.C. Cir. 2001)........ 13
Quill Corp. v. North Dakota, 504 U.S. 298 (1992) ...... 22, 23
Schwegmann Bros. Giant Super Mkts. v. Louisiana
Milk Commn, 365 F. Supp. 1144 (M.D. La. 1973),
affd mem. 416 U.S. 922 (1974) ................................... 16
STATUTES
22 Me. Rev. Stat. Ann. § 2681(3)............................. 3, 18, 19
22 Me. Rev. Stat. Ann. § 2681(4)................................. 18, 19 vi
22 Me. Rev. Stat. Ann. § 2681(5)......................................... 4
22 Me. Rev. Stat. Ann. § 2681(6)......................................... 4
22 Me. Rev. Stat. Ann. § 2681(7)......................................... 5
22 Me. Rev. Stat. Ann. § 2697(2)......................................... 6
28 U.S.C. § 1254(1).............................................................. 1
28 U.S.C. § 46(b).................................................................. 6
42 U.S.C. § 1396 .................................................................. 9
42 U.S.C. § 1396a(a)(10)(A) ................................................ 9
42 U.S.C. § 1396a(a)(19).................................................... 10
42 U.S.C. § 1396d(a) ............................................................ 9
42 U.S.C. § 1396r-8...................................................... 1, 4, 9
42 U.S.C. § 1396r-8(c)(1)............................................... 4, 18
42 U.S.C. § 1396r-8(d) ......................................................... 9
Act to Establish Fairer Pricing for Prescription Drugs,
2000 Me. Legis. Ch. 786 (S.P. 1026) (L.D. 2599) .passim
OTHER AUTHORITIES
Center for Policy Alternatives, Model Legislation:
Prescription Drug Fair Pricing Act ............................. 22
Center for Policy Alternatives, States Poised to Lower
Prescription Drug Prices as First Circuit Court of
Appeals Rules Against PhRMA (May 17, 2001)........... 22
H. 123, S. 19, 102d Gen. Assem., Reg. Sess. (Tenn.
2001)............................................................................. 23
H. 944, S. 765, 82d Leg., Spec. Sess. (Minn. 2001)........... 23
H.B. 1, 2001 Reg. Sess. (Ala. 2001)................................... 23 vii
H.B. 1073, 57th Leg., 1st Spec. Sess. (Wash. 2001) .......... 23
H.B. 1089, 2001 Reg. Sess. (La. 2001) .............................. 23
H.B. 1925, 83rd Leg., Reg. Sess. (Ark. 2001).................... 23
H.B. 2026, 112th Gen. Assem., 1st Reg. Sess. (Ind.
2001)............................................................................. 23
H.B. 2236, 92d Gen. Assem. (Ill. 2001) ............................. 23
H.B. 2692, 2001 Gen. Assem., Reg. Sess. (Va. 2001) ....... 23
H.B. 444, 2001 Gen. Assem., Reg. Sess. (Pa. 2001) .......... 23
H.B. 47, 2001 Reg. Sess. (Haw. 2001) ............................... 23
H.B. 5050, 2001 Gen. Assem., Jan. Sess. (Conn. 2001) .... 23
National Conference of State Legislatures, 2001
Prescription Drug Discount, Bulk Purchasing, and
Price-Related Legislation ............................................. 22
S. 877, 71st Leg., Reg. Sess. (Ore. 2001) ........................... 23 OPINIONS BELOW
The opinion of the court of appeals (App. 1-53) is
reported at 249 F.3d 66 (1st Cir. 2001). The order of the
court of appeals declining to act on PhRMAs petition for
rehearing en banc (App. 54-56) is unreported. The opinion
of the district court (App. 57-72) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on
May 16, 2001. On June 13, 2001 the court of appeals
entered an order denying rehearing and declining action on
PhRMAs timely petition for rehearing en banc. The
jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
C