Companies fight efforts to rein in drug prices
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 out-of-pocket 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, and several state legislatures are still in session.
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.
In addition, the middlemen, known as pharmacy benefit managers, must disclose the amount of rebates and other price concessions they receive from drug companies.
Republicans have their own reasons for concern.
“As state legislators, we are responsible for the wise stewardship of taxpayers’ money,” said state Rep. Norm Thurston of Utah, a Republican. “The state spends a lot of taxpayers’ money on prescription drugs, through Medicaid, corrections and jails, state employees, higher education employees and their dependents. We should be sure we’re getting the best deal.”
In response to a bill introduced by Thurston, the Utah Health Department is studying possible ways to import prescription drugs from Canada, and he is working with a Republican state senator on a bill to require the reporting of price information by drug companies.
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.
“Californians have a right to know why their medication costs are out of control, especially when pharmaceutical profits are soaring,” Gov. Jerry Brown said.
Drug companies have filed suit to block the California law, which they describe as “unprecedented and unconstitutional.”
The law “exports California’s policy choices” to the rest of the country and violates the First Amendment by compelling drug manufacturers to explain their price increases, said the lawsuit, filed by the Pharmaceutical Research and Manufacturers of America.
Reining in drug costs is a top priority for state officials who run Medicaid, the health program that serves more than 70 million low-income people.
TWENTY-FOUR STATES HAVE PASSED 37 BILLS THIS YEAR TO CURB RISING PRESCRIPTION DRUG COSTS.