Three key developments were expected to act as a ceiling on profits for pharmaceutical firms: (1) Managed care plan buyers, who accounted for 70.4% of prescription drug purchases, had made drug cost containment a priority, (2) the Medicare Prescription Drug Improvement and Modernization Act was signed into law in December 2003, and (3) states had become very aggressive in pushing for new legislation aimed at obtaining greater drug discounts for Medicaid and other state-run programs. Many HMOs used a three-tiered copay system to discourage the use of expensive drugs and encourage the use of generics