States sue to block "clawback" payments for Medicare drug benefit

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Five states have asked the U.S. Supreme Court to place a preliminary injunction on the federal government's ability to collect state payments related to drug costs for the most vulnerable residents.

The lawsuit, filed by Texas, Kentucky, Maine, Missouri and New Jersey, charges that the so-called clawback provision is an unconstitutional tax. The states further argue that they should not be told how to use their taxpayer dollars to pay for a federal program. Clawback payments stem from the 2003 Medicare drug law, which requires states to fund a portion of the drug benefit costs for dual eligibles.

The "clawback" mandate took effect Jan. 1 and payment is due soon – prompting states to ask for an injunction to block the payments. The states say they will "suffer irreparable injury" if required to pay the clawback because they will be sacrificing limited revenues intended for domestic demands like education and safety. Ten other states have showed their support for the lawsuit by filing an amicus brief.