Could Maryland's health department legally require drug companies to pay rebates to keep their drugs covered under state-funded health programs?

Plain-English summary

Two members of the General Assembly's Committee on Administrative, Executive, and Legislative Review asked the Attorney General to review proposed emergency regulations that would let Maryland's Department of Health and Mental Hygiene limit which drugs were covered under two state-funded programs, Medical Assistance State-Only (MASO) and the Pharmacy Assistance Program, to drugs made by manufacturers that paid rebates to the State, modeled on a similar rebate scheme that federal law already required for Medicaid drugs. The legislators asked two things: whether the Department actually had the legal authority to do this, especially given that the General Assembly itself had failed to pass bills in 1991 and 1992 that would have granted that authority explicitly, and whether the rebate requirement was really an unconstitutional tax that only the legislature, not an executive agency, could impose.

The Attorney General answered yes to authority and no to the constitutional challenge. On authority, the opinion found a 1989 statute directing the Medical Assistance Program to "use its leverage as a high volume purchaser to promote cost effectiveness" gave the Department enough statutory basis for the rebate regulations, and concluded that the legislature's later failure to pass more specific rebate-authorization bills did not undercut that existing authority, since bills die in the legislative process for all sorts of reasons unrelated to disagreement with an agency's existing power. On the constitutional question, the opinion concluded the rebate was not a "tax" within the meaning of Article 14 of the Maryland Declaration of Rights, because it was money generated through an ordinary commercial relationship (effectively a discount tied to the State's drug purchases), not a compulsory exaction for general revenue, so no separate act of the legislature was constitutionally required to authorize it.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did Maryland's health department have legal authority to require pharmaceutical rebates without a specific rebate law passed by the legislature? Yes. The opinion concluded that HG §15-103.1, a 1989 statute directing the Medical Assistance Program to use its purchasing leverage to promote cost effectiveness, together with the Department's general rulemaking authority under HG §2-104(b)(1), gave the Department sufficient statutory authority to adopt the proposed rebate regulations.

Did it matter that the General Assembly had tried and failed to pass bills specifically authorizing drug rebates in 1991 and 1992? No. The opinion concluded that a legislature's failure to pass a bill confirming or expanding an agency's authority does not, by itself, undermine authority the agency already has under existing law, since bills can die for many reasons unrelated to disagreement with existing agency power, including in this case restrictive amendments added late in the process.

Was the pharmaceutical rebate requirement an unconstitutional tax that only the legislature could impose? No. The opinion concluded the rebate was not a "tax" or "fee" under Article 14 of the Maryland Declaration of Rights, because it arose from an ordinary commercial relationship, in effect a price concession tied to the State's drug purchases, rather than a compulsory exaction collected to raise general revenue.

Why did the opinion compare the rebate to a bridge toll case from 1914? The opinion relied on State Roads Commission v. Postal Telegraph Cable Co. to show that a State agency generating money through an ordinary commercial transaction, there, a fee for using a bridge, does not trigger Article 14's requirement of legislative consent, the same principle it applied to the drug rebate.

Background and statutory framework

Federal law already conditioned Medicaid coverage of most prescription drugs on manufacturers agreeing to pay quarterly rebates to the states under Section 1927 of the Social Security Act. Maryland's proposed emergency regulations extended a similar rebate condition, calculated the same way as the federal "basic rebate," to two purely state-funded programs not otherwise covered by the federal scheme: MASO and the Pharmacy Assistance Program, which together spent $19.5 million on prescription drugs in fiscal year 1991. The Department projected the new rebate requirement would save about $2.5 million for the remainder of that fiscal year.

On statutory authority, the opinion grounded its conclusion primarily in HG §15-103.1, enacted in 1989, which directs the Medical Assistance Program to use its purchasing leverage to promote cost effectiveness, reinforced by legislative history (including a 1988 memorandum from a state senator involved in drafting the provision, discussing the State's potential to obtain volume rebates from drug manufacturers) showing lawmakers had rebates specifically in mind when they passed the statute. The opinion addressed the legislators' concern about the failed 1991 and 1992 rebate-authorization bills by drawing on both Maryland and federal case law holding that a legislature's failure to enact a bill is an unreliable guide to the meaning of existing law, since bills can fail for reasons having nothing to do with whether the underlying authority already exists, a principle the opinion illustrated with a nearly identical federal case involving a Medicare and Medicaid drug reimbursement rule.

On the constitutional question, the opinion read Article 14 of the Maryland Declaration of Rights, which requires legislative consent for any "aid, charge, tax, burthen or fees," narrowly, relying on a 1914 Court of Appeals decision holding that a state agency's ordinary commercial fee-charging (there, tolls for a bridge acquired from a private owner) does not implicate Article 14. The opinion reasoned that the pharmaceutical rebate was likewise generated through a commercial relationship, effectively part of the price the State paid for drugs, rather than a compulsory exaction collected for general government revenue, the hallmark of a "tax" under both Maryland and U.S. Supreme Court case law. The opinion also found the General Assembly had supplied adequate legislative standards to guide the Department's exercise of this authority, satisfying separation-of-powers requirements given the practical difficulty of legislating detailed rules for a complex and changing health care market.

Citations and references

Statutes:

• 42 U.S.C. §1396s(a), (c), and (c)(1), federal Medicaid drug rebate requirements
• Section 1927(a), (a)(3), (c)(1), and (c)(2) of the Social Security Act, the federal Medicaid rebate program
• HG §2-104(b)(1), the Secretary's general rulemaking authority
• HG §15-103.1, directing the Medical Assistance Program to use purchasing leverage for cost effectiveness
• HG §15-103, mandating the Secretary to administer the Medical Assistance Program
• HG §15-105, reimbursement procedures
• HG §15-124, mandating a Pharmacy Assistance Program
• HG §15-101(c), defining "Program" for purposes of §15-103.1
• COMAR 10.09.03.05-1, the proposed MASO rebate regulation
• COMAR 10.45.02.05-1, the proposed Pharmacy Assistance Program rebate regulation
• Article 14 of the Maryland Declaration of Rights, requiring legislative consent for taxes and fees
• Article 8 of the Maryland Declaration of Rights, the separation of powers clause
• Senate Bill 493 (1991), a failed bill that would have specifically authorized drug rebates
• House Bill 194 (1992), a similar failed bill

Cases:

• Department of Transportation v. Armacost, 311 Md. 64, 74, 532 A.2d 1056 (1987), Maryland Court of Appeals
• Privette v. State, 320 Md. 738, 744, 580 A.2d 188 (1990), Maryland Court of Appeals
• Kaczorowski v. City of Baltimore, 309 Md. 505, 514, 525 A.2d 628 (1987), Maryland Court of Appeals
• Tucker v. Fireman's Fund Ins. Co., 308 Md. 69, 75, 517 A.2d 730 (1986), Maryland Court of Appeals
• Demory Brothers v. Board of Public Works, 20 Md. App. 467, 473, 316 A.2d 529 (1974), aff'd, 273 Md. 320, 329 A.2d 674 (1974), Maryland courts
• Bosley v. Dorsey, 191 Md. 229, 60 A.2d 691 (1948), Maryland Court of Appeals
• United States v. Wise, 370 U.S. 405, 411 (1962), U.S. Supreme Court
• American Trucking Ass'ns, Inc. v. Atchison, T. & S.F. Ry. Co., 387 U.S. 397, 418 (1967), U.S. Supreme Court
• American Medical Ass'n v. Mathews, 429 F. Supp. 1179, 1200 (N.D. Ill. 1977), federal district court
• State Roads Commission v. Postal Telegraph Cable Co., 123 Md. 73, 91 A. 147 (1914), Maryland Court of Appeals
• Welch v. Henry, 305 U.S. 134, 146 (1938), U.S. Supreme Court
• Meriwether v. Garrett, 102 U.S. 472, 513 (1880), U.S. Supreme Court
• Governor v. Exxon Corp., 279 Md. 410, 440, 370 A.2d 1102 (1977), aff'd, 437 U.S. 117 (1978), Maryland Court of Appeals and U.S. Supreme Court

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1992/Volume77_1992.pdf (this opinion appears at printed page 110 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Health - Medicaid - Statutory Construction -
Constitutional Law - Proposed Pharmaceutical Rebate Regulations Are Lawful

August 13, 1992

The Honorable Paula C. Hollinger
The Honorable Kenneth H. Masters
Committee on Administrative, Executive,
and Legislative Review

You have requested our opinion regarding the statutory authority for, and constitutionality of, proposed emergency regulations of the Department of Health and Mental Hygiene ("Department") that generally restrict the coverage of drugs under two State-funded health care programs to drugs manufactured by pharmaceutical companies that provide certain rebates to the State.

You asked that, during our review of the statutory authority of the Department, we consider in particular whether the Department's authority is affected by the failure of bills proposed in the 1991 and 1992 Sessions that would have provided the Department with specific statutory authority to require rebates in the two programs at issue. Further, regarding the constitutionality of the regulations, you asked whether the "pharmacy rebate program [is] an unconstitutional usurpation of the power to tax, which is reserved to the General Assembly under Article 14 of the Maryland Declaration of Rights, and therefore [violates] ... the doctrine of separation of powers contained in Article 8 of the Maryland Declaration of Rights."

For the reasons stated below, we conclude as follows:

1. The Department of Health and Mental Hygiene has statutory authority to adopt the proposed regulations on pharmaceutical rebates.

2. The proposed regulations do not violate Article 14 of the Maryland Declaration of Rights and are not otherwise unconstitutional.

I

Background

The Maryland Medical Assistance Program comprises two parts.
One part, referred to as the federal/State program or "Medicaid," is funded by both the federal and State governments and is subject to federal and State statutes and regulations. The other part of the Maryland program is referred to as Medical Assistance State-Only ("MASO"). The State provides all funding for MASO and is its sole architect. See generally 75 Opinions of the Attorney General 241, 242 (1990). A third program, the Pharmacy Assistance Program, is also funded entirely by the State and subject only to State law. During fiscal year 1991, MASO and the Pharmacy Assistance Program spent $19.5 million on prescription drugs.

Currently, federal law conditions coverage of most prescription drugs in the Medicaid Program on drug manufacturers' providing rebates to the states. Section 1927(a) of the federal Social Security Act, with limited exceptions, makes Medicaid coverage of drugs conditional on the manufacturers' entering into rebate agreements with the federal Department of Health and Human Services on behalf of the states. 42 U.S.C. §1396s(a). Under the agreement, manufacturers must provide quarterly rebate payments to the States, calculated in accordance with Section 1927(c) of the Social Security Act, 42 U.S.C. §1396s(c).1 Under Section 1927(a)(3), rebate agreements are excused only when, among other conditions, "the State has made a determination that the availability of the drug is essential to the health of beneficiaries under the State plan for medical assistance."

The Department's proposed emergency regulations are modeled on the federal rebate program for Medicaid.2 The Department's regulations would authorize the Secretary to limit coverage of drugs in the Medical Assistance State-Only and Pharmacy Assistance Programs to (i) drugs produced by manufacturers that provide the same "basic rebate" provided under Section 1927(c)(1) to the MASO and Pharmacy Assistance Programs;3 and (ii) other drugs the availability of which has been determined by the Secretary to be essential to the MASO and Pharmacy Assistance Program recipients.

II

Statutory Authority

"[A]gency rules and regulations must be reasonable and consistent with the letter and spirit of the law under which the agency works." Department of Transportation v. Armacost, 311 Md. 64, 74, 532 A.2d 1056 (1987). In this instance, "the law under which the agency works" gives the Department not only general rulemaking authority but also a broadly worded warrant to save tax dollars through its indirect purchase of drugs under the two programs.

In proposing the MASO and Pharmacy Assistance regulations for emergency status, the Department relies on statutory authority at, among other provisions, §§2-104(b) and 15-103.1 of the Health-General Article ("HG" Article).4 HG §2-104(b)(1) provides the Secretary with authority "to adopt rules and regulations to carry out the provisions of law that are within the jurisdiction of the Secretary." HG §15-103.1, enacted in 1989 as part of a set of amendments generally relating to the Medical Assistance Program, states simply: "The Program shall use its leverage as a high volume purchaser to promote the cost effectiveness of Maryland's Health Care System."

In determining whether this authority extends to the Department's proposed pharmaceutical rebate programs, we seek "to ascertain and effectuate the legislative intention .... The language of the statute itself is the primary source of this intent; and the words used are to be given 'their ordinary and popularly understood meaning, absent a manifest contrary legislative intention.'" Privette v. State, 320 Md. 738, 744, 580 A.2d 188 (1990) (citations omitted).

HG §15-103.1 supports the Department's proposed regulations. By conditioning drug coverage on rebates to the MASO and Pharmacy Assistance Programs, the emergency regulations at issue reflect the Program's use of its leverage as a high-volume purchaser to reduce the pharmaceutical costs to the two programs. According to the Department, the regulations will achieve savings of approximately $2.5 million during the remainder of this fiscal year. The regulations thus "promote the cost effectiveness of" these State programs, two important components of Maryland's health care system.5

Moreover, the legislative history of the bill that included HG §15- 103.1 reflects concern about the high costs of drugs to the Program and consideration of pharmaceutical rebates to control costs. For example, a November 9, 1988 memorandum from Senator Barbara Hoffman, a member of the Special Joint Legislative Committee on the Medical Assistance Program involved in the development of the legislation, recognizes that "[t]he state is probably the largest purchaser of pharmaceuticals through our Medical Assistance Program and state hospitals, etc., but we don't get a volume discount because our clients for the most part go to various pharmacies as individuals." She goes on to discuss the implications of the State's obtaining "a rebate on a quarterly basis from the drug manufacturers based on our volume purchases . .." Memorandum at 2. This legislative background buttresses a reading of the provision that authorizes the Department's proposed regulations.

We have considered whether legislative action occurring after the enactment of HG §15-103.1 in 1989 undermines reliance on this statutory authority. In both the 1991 and 1992 Sessions, bills were introduced in the General Assembly that would have specifically authorized the Department to require rebates from pharmaceutical manufacturers as a condition of drug coverage in the MASO and Pharmacy Assistance Programs. In 1991, Senate Bill 493 was introduced in the Senate and referred to the Senate Finance Committee, where it never came to a vote.

House Bill 194 of 1992, a similar bill, passed unanimously in the House. It was then referred to the Senate Finance Committee. An amended version, which altered the rebate methodology and added other amendments limiting the Department's authority to impose drug preauthorization requirements, passed the Senate. According to a July 9, 1992 memorandum from Jolie H. Matthews, Esquire, Committee Counsel to the Members of the AELR Committee: "House Bill 194 failed in the last few days of the 1992 Session because the House refused to concur in a set of amendments added to the bill by the Senate and the Senate never appointed a Conference Committee."

In our view, the General Assembly's failure to pass these bills does not affect the existing statutory authority for the emergency regulations on which the Department relies. Bills fail to pass for a host of reasons, some of which do not necessarily reflect disagreement with the substance of the legislation. A bill to confirm agency authority might be thought unnecessary, for example.6 In the case of House Bill 194 of 1992, the bill appears to have died because restrictive amendments were added.

In general, reliable conclusions as to the prior legislative intent for enacted legislation cannot readily be drawn from the subsequent failure of the General Assembly to enact proposed legislation.7 As the United States Supreme Court said in United States v. Wise, 370 U.S. 405, 411 (1962):

[S]tatutes are construed by the courts with reference to the circumstances existing at the time of the passage.
The interpretation placed upon an existing statute by a subsequent group of Congressmen who are promoting legislation and who are unsuccessful has no persuasive significance here .... Logically, several equally tenable inferences could be drawn from the failure of the Congress to adopt an amendment in the light of the interpretation placed upon the existing law by some of its members, including the inference that the existing legislation already incorporated the offered change.

(Citations omitted).

Moreover, the Department's role in promoting the proposed legislation is largely irrelevant, as well. "The advocacy of legislation by an administrative agency - and even the assertion of the need for it to accomplish a desired result - is an unsure and unreliable, and not a highly desirable, guide to statutory construction. The possibility of its use to prove more than it means may, but should not, deter administrative agencies from seeking helpful clarification of authority or a fresh and specific congressional mandate." American Trucking Ass'ns, Inc. v. Atchison, T. & S.F. Ry. Co., 387 U.S. 397, 418 (1967).

In a case with a number of parallels to the facts at hand, the Pharmaceutical Manufacturers Association and other plaintiffs challenged regulations of the then-U.S. Department of Health, Education and Welfare to limit payment for prescription drugs for Medicare and Medicaid. In response to plaintiffs' arguments that Congress had rejected bills that would have given specific authority to the Secretary of HEW to establish the regulatory program, a federal district court stated:

[U]nsuccessful attempts at legislation are not the best of guides to legislative intent .... Legislators may merely wish to make clear what form a program should take rather than leave its details to an administrator's discretion. Similarly, the fact that Congress has failed to adopt HEW recommendations for specific limitations on drug reimbursement does not establish that such a proposal is excluded from a general provision on the subject.

American Medical Ass'n v. Mathews, 429 F. Supp. 1179, 1200 (N.D. Ill. 1977) (citation omitted). We reach the same conclusion here.

III

Constitutionality

You asked if the rebate requirement is "an unconstitutional usurpation of the power to tax, which is reserved to the General Assembly by Article 14 of the Maryland Declaration of Rights ..." and is thus a violation of the separation of powers clause, Article 8 of the Declaration of Rights. We conclude that Article 14 is not violated by the proposed regulation.

Article 14 of the Declaration of Rights provides "[t]hat no aid, charge, tax, burthen or fees ought to be rated or levied, under any pretense, without the consent of the Legislature." This clause was first adopted as part of the Constitution of 1776 and has undergone no substantive change in the succeeding constitutions. See Constitutional Convention Commission, Constitutional Revision Study Documents at 606-07 (1968). The clause was adopted as proposed to the Convention of 1776. See Proceedings of the Convention of 1774, 1775, and 1776 at 296-97 and 310-12 (Lucas & Deaver ed. 1836). Thus, there is no documented history of the meaning of this limitation.

In our view, a State agency's monetary gain in the ordinary course of commercial dealing is not a "tax" or "fee" within the scope of Article

14. The only reported case that deals in more than a summary fashion with
    Article 14, State Roads Commission v. Postal Telegraph Cable Co., 123 Md. 73, 91 A. 147 (1914), supports our understanding of the scope of Article 14. In this case, the Court of Appeals held that even in the absence of legislative authorization, the State Roads Commission could charge a fee for the use of a bridge that the Commission had acquired from a private party. The private party had charged a fee for the use of the bridge and the Commission had the same right by contract as an assignee. This right was part of the consideration in the purchase of the bridge. 123 Md. at 76-7. In so ruling, the Court rejected the holding of the trial court that charging the fee violated Article 14. 123 Md. at 74 and 77.

    While the scope of Article 14 remains unclear, the implication of the
    Postal Telegraph case is that Article 14 does not apply to a State agency that generates money in a commercial transaction concerning particular goods or services. The same distinction is commonly made in the definition of a tax. As the United States Supreme Court wrote many years ago:

        Taxation is neither a penalty imposed on the taxpayer
        nor a liability which he assumes by contract. It is but
        a way of apportioning the cost of government among
        those who in some measure are privileged to enjoy its
        benefits and must bear its burdens.
    

Welch v. Henry, 305 U.S. 134, 146 (1938). See also, e.g., Meriwether v. Garrett, 102 U.S. 472, 513 (1880).8

In our opinion, the rebate called for under the Department's proposed regulations is not a tax or other levy within the meaning of Article 14. Rather, it is money that is generated as part of the consideration in the acquisition of particular goods. Essentially, the State is promising to continue to purchase drugs made by companies that refund part of the purchase price ultimately paid to them as manufacturers. Although it is true that the State and the pharmaceutical manufacturers do not contract directly with each other, nevertheless they have a commercial relationship through the distribution network for prescription drugs, and the rebate will simply be a cost of the manufacturers' doing business with participants in the two programs. The logic of the distinction drawn by the Supreme Court fully applies in this context: The rebate is not a tax.9

The proposed rebate requirement, in short, is not encompassed by, and therefore does not require express legislative approval under, Article 14 of the Declaration of Rights. Hence, the Department's proposed regulation does not usurp the General Assembly's prerogative to levy taxes, in violation of the separation of powers clause.

Moreover, as explained in Part II above, the General Assembly has delegated ample authority to the Secretary to establish the rebate program. Although the separation of powers clause generally requires that there be legislatively prescribed standards for the exercise of this kind of authority, "it has been recognized that the complexity of modern economic conditions may make it impossible to tailor specific guidelines for every conceivable situation and that latitude in granting discretion is necessary." Governor v. Exxon Corp., 279 Md. 410, 440, 370 A.2d 1102 (1977), aff'd, 437 U.S. 117 (1978). The complexities of the health care market make greater legislative specificity virtually impossible in this instance.

IV

Conclusion

In summary, it is our opinion that:

1. The Department of Health and Mental Hygiene has statutory authority to adopt the proposed regulations on pharmaceutical rebates.

2. The proposed regulations do not violate Article 14 of the Maryland Declaration of Rights and are not otherwise unconstitutional.

J. Joseph Curran, Jr.
Attorney General

D. Michal Freedman
Assistant Attorney General

Richard E. Israel
Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

1
Section 1927(c)(1) provides for a "basic rebate" amount, which is generally proportional to the greater of either a particular percentage of the average manufacturer price or the difference between the average manufacturer price and best price for the drug. Section 1927(c)(2) goes on to provide an "additional rebate" amount.

2
The emergency regulations for MASO at COMAR 10.09.03.05-1 state as follows:
A drug in this program is not covered for State-Only recipients if:
(A) the manufacturer has not provided the same rebate to the State for State-Only and Pharmacy Assistance recipients' purchases of drugs as is required under Section 1927(c)(1) of the federal Social Security Act (42 U.S.C. §1396s(c)(1));
(B) the Program has provided notice to the manufacturer of its failure to provide adequate rebates and its opportunity to request a waiver from the rebate requirement under (C) of this Regulation; and
(C) the manufacturer has failed to demonstrate to the Secretary that the drug's availability is essential to State-Only recipients.
The wording of the proposed emergency regulations for the Pharmacy Assistance Program at COMAR 10.45.02.05-1 is quite similar.

3
The Department's rebate programs would not impose the "additional rebate" imposed under the federal Social Security Act at Section 1927(c)(2). See note 1 above.

4
The Department also cites HG §15-103, which mandates the Secretary to administer the Maryland Medical Assistance Program; §15-105, which addresses reimbursement procedures; and §15-124, which mandates the Department to maintain a Pharmacy Assistance Program.

5
Because the term "Program" is defined by HG §15-101(c) to mean the Maryland Medical Assistance Program, HG §15-103.1, read literally, only mandates that the Medical Assistance Program alone is to use its leverage to promote the cost-effectiveness of it and other health care programs. This narrow reading of §15-103.1 would lead to the conclusion that a cognate program like Pharmacy Assistance may not use its leverage to promote health care cost- effectiveness. In light of recent Court of Appeals' decisions, however, a reading of
§15-103.1 that would exclude Pharmacy Assistance should be rejected. In Kaczorowski v. City of Baltimore, 309 Md. 505, 514, 525 A.2d 628 (1987), the Court of Appeals stated:
[T]he plain-meaning rule does not force us to read legislative provisions in rote fashion and in isolation. What we are engaged in is the divination of legislative purpose or goal.
Indeed, as we have explained, the plain-meaning rule "is not a complete, all-sufficient rule for ascertaining a legislative intention ..." The "meaning of the plainest language" is controlled by the context in which it appears. (Citations omitted.) Because the General Assembly intended HG §15-103.1 to encourage the cost-effectiveness of State-funded health care programs, the provision should not be read to exclude cost-effectiveness efforts such as those embodied in the emergency regulations for the Pharmacy Assistance Program at issue here. We are "adopt[ing] that construction which avoids an illogical or unreasonable result, or one which is inconsistent with common sense." Tucker v. Fireman's Fund Ins. Co., 308 Md. 69, 75, 517 A.2d 730 (1986).

6
Your request presents the issue of the effect of legislative failure to enact specific authority on a claim of existing general authority. In the "reverse" situation, where the General Assembly failed to enact a bill that would have repealed authority claimed to exist, the Maryland Court of Appeals found that such failure could be used to "buttress" a finding of existing statutory authority. See Demory Brothers v. Board of Public Works, 20 Md. App. 467, 473, 316 A.2d 529 (1974), aff'd, 273 Md. 320, 329 A.2d 674 (1974).

7
To be sure, where there are serious doubts about statutory authority for an action, coupled with an agency's longstanding failure to act upon such authority, legislative rejection of amendments designed to provide specific authority may "strengthen" the conclusion that statutory authority is lacking. See Bosley v. Dorsey, 191 Md. 229, 60 A.2d 691 (1948). Here, by contrast, the Department relied upon legislation that was enacted relatively recently and that confers authority embracing the Department's proposed rebate programs.

8
A treatise summarizes the point this way:
The essential characteristics of a tax are that it is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority in the exercise of the taxing power, the contribution being of a proportionate character, payable in money, and imposed, levied, and collected for the purpose of raising revenue to be used for public or governmental purposes and not as payment for some special privilege granted or service rendered.
19 M.L.E. Revenue and Taxation §1, at 66 (1961) (emphasis added). Analogously, in a recent opinion we distinguished the kind of "fees" encompassed by Article 14 - those "that a citizen must pay to receive a service that only a public officer can provide ..." - from those incident to commercial transactions. 76 Opinions of the Attorney General 95, 98 (1991).

9
An alternative reason for rejecting the characterization of the rebate as a tax derives from the purpose of the rebate. "[T]he essential characteristics of a tax are that it is ... imposed, levied, and collected for the purpose of raising revenue
..." 84 C.J.S. Taxation §1b, at 32-33 (1954). The purpose of the rebate programs is not to raise State revenue but rather to reduce program costs incurred in covering drugs for MASO and Pharmacy Assistance recipients.