How States Are Working to Control Prescription Drug Costs

Washington is focusing on innovation, while states are putting their efforts into cutting costs.

WASHINGTON - JULY 29: U.S. Rep. Gene Green (D-TX) speaks during a hearing regarding the alleged ethics breaches by Rep. Charles Rangel (D-NY) before the House Committee on Standards of Official Conduct July 29, 2010 on Capitol Hill in Washington, DC. The Investigative Subcommittee of the House committee has announced 13 ethics charges against Rangel. (Photo by Alex Wong/Getty Images)
National Journal
June 1, 2015, 4 p.m.

States are in­creas­ingly pay­ing at­ten­tion and tak­ing steps to bring down the skyrock­et­ing cost of pre­scrip­tion medi­cine.

Last month in Cali­for­nia, the board of the state Af­ford­able Care Act ex­change—Covered Cali­for­nia—voted to cap most spe­cialty drug co-pays at $250 per month, the first ex­change in the na­tion to set a lim­it.

“We had these bar­ri­ers in place, and we were hear­ing from pa­tients that were still cut­ting their meds in half, wer­en’t get­ting their meds, and were afraid of things hap­pen­ing to them when they thought they fi­nally had health in­sur­ance,” said Liz Helms, pres­id­ent and CEO of the Cali­for­nia Chron­ic Care Co­ali­tion, which worked with Covered Cali­for­nia on the policy.

Pre­scrip­tion drug spend­ing in the U.S. in­creased by more than 13 per­cent in 2014, largely due to a more than 30 per­cent in­crease in spend­ing on spe­cialty drugs, ac­cord­ing to a re­port by Ex­press Scripts, a phar­macy be­ne­fit man­age­ment or­gan­iz­a­tion.

There are gen­er­ally two types of le­gis­la­tion float­ing around: lim­its to co-pays, and drug pro­duc­tion cost trans­par­ency laws.

This month, New York be­came the sixth state to in­tro­duce a ver­sion of the trans­par­ency le­gis­la­tion, join­ing Cali­for­nia, Ore­gon, Mas­sachu­setts, North Car­o­lina, and Pennsylvania. None of the bills have passed. The bills would re­quire drug man­u­fac­tur­ers to sub­mit a re­port to the state out­lining the total costs of pro­duc­tion of pricey drugs and to pub­lish this in­form­a­tion on a pub­lic web­site.

PhRMA op­poses the trans­par­ency le­gis­la­tion, cit­ing leg­al and lo­gist­ic­al con­cerns—and the view that it un­fairly tar­gets one part of the health care in­dustry.

“These bills are look­ing at the cost of drugs without look­ing at what goes in­to cre­at­ing them. The fact that nine out of ten com­pounds nev­er make it to mar­ket is not ac­coun­ted for in these bills,” said Priscilla VanderVeer, seni­or dir­ect­or of com­mu­nic­a­tions for PhRMA. “And frankly, it would be very dif­fi­cult.”

State laws put­ting caps on co-pays have been more suc­cess­ful. Delaware en­acted a law pre­vent­ing co-pays from rising above $100 a month for a 30-day sup­ply of any spe­cialty tier drug in 2013. Louisi­ana and Mary­land have passed sim­il­ar laws, and Maine and Ver­mont have passed laws lim­it­ing yearly co-pays. New York passed a law in 2010 elim­in­at­ing spe­cialty drug tiers al­to­geth­er.

“It’s star­ted to crop up with­in the past few years,” said Leigh Pur­vis, dir­ect­or of health ser­vices re­search at AARP’s Pub­lic Policy In­sti­tute. “I think it’s gain­ing pop­ular­ity as more and more states are be­ing con­fron­ted with cit­izens say­ing, ‘This is a real prob­lem.’”

Ac­tion is be­ing taken on the fed­er­al level as well, in a slightly dif­fer­ent form.

In the House of Rep­res­ent­at­ives, En­ergy and Com­merce Chair­man Fred Up­ton’s med­ic­al in­nov­a­tion bill passed un­an­im­ously through com­mit­tee. The bill, which Up­ton hopes to get through Con­gress by the end of the year, would sup­port the cre­ation of drugs, but does noth­ing to ad­dress their cost.

KJ Hertz, seni­or le­gis­lat­ive rep­res­ent­at­ive for the AARP, is hope­ful that cost con­trols will be ad­ded to Up­ton’s le­gis­la­tion, dubbed 21st Cen­tury Cures, if and when the Sen­ate pro­duces its ver­sion of the bill. But House Demo­crats and Re­pub­lic­ans seem di­vided over the ne­ces­sity of cost con­trols.

Dur­ing the le­gis­la­tion’s com­mit­tee markup, two amend­ments were in­tro­duced by Demo­crat­ic mem­bers and with­drawn im­me­di­ately—one re­quir­ing drug price trans­par­ency and an­oth­er al­low­ing the gov­ern­ment to ne­go­ti­ate the price of pre­scrip­tion drugs through Medi­care.

Up­ton thinks high drug prices will be re­duced through a more stream­lined, shortened de­vel­op­ment pro­cess un­der the le­gis­la­tion as-is and doesn’t have any plans for le­gis­la­tion ad­dress­ing cost spe­cific­ally.

“It’s go­ing to get those drugs to mar­ket much—years —earli­er, so that ought to re­duce the cost,” he said in an in­ter­view.

Demo­crats don’t see cost le­gis­la­tion as likely to come up in the fu­ture either, but not be­cause they don’t want it to.

“I don’t see it hap­pen­ing on the floor,” said Demo­crat­ic Rep. Gene Green, a co­spon­sor of the Cures le­gis­la­tion, of the trans­par­ency amend­ment. “The goal of this was re­search and get­ting phar­ma­ceut­ic­als from the lab table to the bed­side. That’s a whole dif­fer­ent battle. Even though I sup­port it, I don’t see it hap­pen­ing on this. I don’t see it hap­pen­ing in the Sen­ate with a Re­pub­lic­an ma­jor­ity either.”

But he thinks it’s an im­port­ant is­sue worth tack­ling, and could im­pede the pro­cess of get­ting new med­ic­a­tion in­to the hands of pa­tients.

“If you don’t have a Part D or you don’t have a par­tic­u­lar drug plan, no mat­ter what the doc­tor pre­scribes, if you can’t af­ford them you won’t be able to take them. And that’s the prob­lem,” Green said.

COR­REC­TION: A pre­vi­ous ver­sion of this story mis­stated Rep. Fred Up­ton’s chair­man­ship.

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