As states rush to curb drug costs, drug companies are fighting back

WASHINGTON — States around the country are clamping down on pharmaceutical companies, forcing them to disclose and justify price increases, but the drug manufacturers are fighting back, challenging the state laws as a violation of their constitutional rights.

Even more states are, for the first time, trying to regulate middlemen who play a crucial role by managing drug benefits for employers and insurers, while taking payments from drug companies in return for giving preferential treatment to their drugs.

The bipartisan efforts by states come as President Donald Trump and his administration put pressure on drug companies to freeze prices and reduce costs for consumers struggling to pay for drugs that often cost thousands of dollars a month.

Twenty-four states have passed 37 bills this year to curb rising prescription drug costs, according to Trish Riley, the executive director of the National Academy for State Health Policy, a nonpartisan forum of policymakers.

The burst of state activity on drug costs recalls the way states acted on their own to pass laws to expand health insurance coverage in the years before Congress passed the Affordable Care Act in 2010.

“In the absence of federal action, states are taking the lead in combating high drug prices,” said state Rep. Sean Scanlon of Connecticut, a Democrat.

A bill passed unanimously this year by the Connecticut General Assembly illustrates a popular tactic: States are shining a spotlight on drug price increases as a first step toward controlling costs.

Under the Connecticut law, drug companies must justify price increases for certain drugs if the price rises by at least 20 percent in one year or 50 percent over three years.

Insurers must identify their 25 highest-cost drugs and the 25 with the greatest cost increases when they file their annual rate requests with the state Insurance Department.

California has adopted a law requiring drug companies to provide advance notice of price increases, together with a detailed statement of the reasons for the increases.

In addition, insurers must file annual reports showing the percentage of premiums attributable to drug costs.

Drug companies have filed suit to block the California law, which they describe as “unprecedented and unconstitutional.”

A growing number of states have passed laws to ensure that pharmacists can inform customers of less expensive options. These laws ban “gag clauses,” which prevent pharmacists from telling consumers when they could save money on prescriptions by paying cash rather than using their health insurance.