The sociopolitical environment is one of the uncontrollable business and marketing variables in contrast to controllable marketing variables such as product, price, place, and promotion (so-called 4’Ps). Uncontrollable business and marketing variables include the economic environment, the social environment, the political environment, and the legal and regulatory environment. Recently, a possible change in the legal and regulatory environment in the US is casting a shadow on the future of pharmaceutical industry. On May 19, 2003 the US Supreme Court’s 6-to-3 decision lifted an injunction that was blocking Maine from implementing a program called Maine Rx since the state's Legislature enacted it in 2000. The program would lower prescription drug prices by approximately 30% for the 325,000 uninsured people living in the state of Maine by allowing the state to buy drugs in bulk for a discount. The decision was seen as a significant setback for the pharmaceutical industry because of its profitability consequences. Outpatient prescription drugs account for 9 percent of Medicaid spending but have become a focus of state cost-control efforts because Medicaid spending on drugs has been rising at annual rates of 15 percent to 20 percent for several years. Under Maine Rx, the state assumes the role of a pharmacy benefit manager and requires drug manufacturers who want to sell their products in Maine to negotiate rebates similar to those the manufacturers have accepted on drugs they sell through the Medicaid program. The program sets no income ceiling or other description of financial need and is theoretically open to anyone, although the state has proposed regulations to disqualify those who have prescription drug coverage. Since a state can not directly impose price regulation, Maine gave the drug companies a powerful incentive to go along: manufacturers that did not cooperate faced having their products subject to a "prior authorization" procedure, under which the state's Department of Human Services would have to approve prescriptions case by case before pharmacies could dispense them. For drugs prescribed through Medicaid, federal law permits states to use this pre-authorization procedure, which manufacturers, doctors, and patients all regard as onerous. Doctors and patients tend to seek alternatives to drugs for which pre-authorization is required. The industry argued in its lawsuit that by using the procedure for a purpose not directly linked to Medicaid, Maine had gone beyond its legal authority. Legislators in 19 other US states have recently offered bills to create drug discount programs similar to Maine's. The states are Colorado, Florida, Georgia, Hawaii, Illinois, Indiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New York, Ohio, Rhode Island, Tennessee, Texas, Vermont and West Virginia. If any state has success passing the bill, it's likely that most -- if not all -- states would pursue such a law. It is estimated that there are seventy million Americans who do not have prescription drug coverage, so numerous state laws requiring bulk discounts for them would take a bite from total drug profits. The US Supreme Court didn't rule conclusively on the legality of the Maine Rx program and the state's plan might not survive further challenges. However, just like the Clinton plan, it may change the thinking of pharmaceutical industry. The final resolution need to take consideration of both sides into accounts: pharmaceutical industry needs to protect profits in order to cover the soaring cost of developing new medicines, and states want to provide the best health care possible to all citizens at affordable prices. |