Supreme Court Won't Block Maine Drug Program

The Supreme Court Monday let stand a plan by Maine that seeks to reduce prescription drug prices for more than 300,000 residents who have no health insurance.

The justices warned that further proceedings will determine if the measure will actually become a law, and there is a chance that it won't. The court simply ruled that the drug industry, which opposes the program, didn't show adequate reasons why it should be blocked.

The so-called Maine Rx program would aggregate the state's buying power under Medicaid to allow poor people and retirees to receive 25% lower prescription drug prices. The Pharmaceutical Research and Manufacturers of America, which represents the drug industry, challenged the proposed law, contending that it conflicts with interstate commerce.

The decision sent share prices of several pharmaceutical companies lower, including Merck(MRK - Cramer's Take - Stockpickr), which fell 6% to $55.90, Eli Lilly(LLY - Cramer's Take - Stockpickr), which lost 1.7% to $1.71, and Bristol-Myers Squibb(BMY - Cramer's Take - Stockpickr) at $24.05, down 6.9%. The Amex pharmaceuticals index dropped 4.4%.

Maine Rx would allow Maine to negotiate bulk discounts from drug makers. It was created out of concern that Maine residents who are not covered under Medicaid couldn't afford prescription drugs. Initially, a federal judge issued a preliminary injunction against the law, which was approved by Maine's state legislature in 2000.