States look to con­trol drug prices


WASHINGTON — Frus­trated by fed­eral in­ac­tion, state law­mak­ers in 41 states have pro­posed de­tailed plans to lower soar­ing pre­scrip­tion drug costs. Some mea­sures would give state Med­i­caid agen­cies more ne­go­ti­at­ing power. Oth­ers would dis­close the pric­ing de­ci­sions of the drug man­u­fac­tur­ers and the com­pa­nies that ad­min­is­ter pre­scrip­tion drug plans.

The more am­bi­tious pro­pos­als would bump up against fed­eral au­thor­ity, such as leg­is­la­tion that would al­low im­port­ing drugs from Canada or al­ter fed­eral statutes on the prices states pay for drugs in Med­i­caid. They likely would have to sur­vive a chal­lenge in fed­eral court. And many likely would face re­sis­tance from a deep-pock­eted phar­ma­ceu­ti­cal in­dus­try.

Ac­cord­ing to the Na­tional In­sti­tute on Money and Pol­i­tics, a non­profit that col­lects cam­paign fi­nance data, the phar­ma­ceu­ti­cal in­dus­try in 2018 con­trib­uted nearly $19 mil­lion to state cam­paigns, and $56 mil­lion to fed­eral ones.

“States are lim­ited in power in this area,” said Rachel Sachs, a health law ex­pert at Washington Uni­ver­sity in St. Louis School of Law. “But one of the im­pacts of these ef­forts is to put pres­sure on the fed­eral govern­ment, and force it to jus­tify its ac­tions to stymie the states.”

Pres­i­dent Don­ald Trump has crit­i­cized soar­ing drug prices, and on Thurs­day the Depart­ment of Health and Hu­man Ser­vices an­nounced a draft reg­u­la­tion that would al­low drug­mak­ers to of­fer dis­counted prices di­rectly to con­sumers — but with­out giv­ing re­bates to Med­i­caid man­aged care or­ga­ni­za­tions or the mid­dle­men known as phar­macy ben­e­fit man­agers.

Be­tween 2012 and 2017, drug spend­ing in the United States in­creased nearly 29 per­cent while over­all health spend­ing rose less than 25 per­cent. Since 2013, the growth in pre­scrip­tion drug spend­ing has ex­ceeded GDP growth, which means the in­dus­try is con­sum­ing an in­creas­ingly large share of the U.S. econ­omy.

Some states are em­pha­siz­ing trans­parency, with the goal of sham­ing drug com­pa­nies into mod­er­at­ing their prices. New Hamp­shire, New Jer­sey and Washington state are con­sid­er­ing re­quir­ing man­u­fac­tur­ers to dis­close to states (but usu­ally not to the pub­lic, to pro­tect pro­pri­etary in­for­ma­tion) what they spend on ad­ver­tis­ing, and re­search and de­vel­op­ment.

Still oth­ers, in­clud­ing Ari­zona, Florida, Maine, New Jer­sey and New York, also want to cast light on the op­er­a­tions of phar­macy ben­e­fit man­agers, known as PBMs, the gi­ant buy­ing net­works that ad­min­is­ter pre­scrip­tion plans on be­half of in­sur­ers.

The the­ory be­hind PBMs is that their size and ex­per­tise re­sults in sav­ings for con­sumers. In re­cent years, how­ever, crit­ics have ar­gued that the PBMs are pock­et­ing the sav­ings rather than pass­ing them on to con­sumers. And in many states, the phar­macy ben­e­fit man­agers im­pose a gag or­der on phar­ma­cists, block­ing them from telling con­sumers about cheaper drug op­tions.

Other state leg­is­la­tors want to reg­u­late PBMs. Leg­is­la­tors in Delaware, Min­nesota and South Carolina have filed bills that would re­quire PBMs to be li­censed, so that the state could stan­dard­ize their prac­tices. While some states re­quire PBMs to reg­is­ter with the state, only a few, such as Ge­or­gia and South Dakota, have li­cens­ing re­quire­ments.

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