Around the Country, States Pass Bills to Curb Drug Costs

Drug Companies Fight Back, Claiming First Amendment Violation

Twenty-four states have passed 37 bills so far this year in an effort to curtail prescription drug costs and to force drug companies to disclose and justify their price increases. Not surprisingly, the drug companies are fighting back, claiming they should not be compelled to explain their price increases because the requirement would violate the First Amendment. Although President Trump’s administration is putting pressure on drugmakers to freeze prices and reduce exorbitant out-of-pocket costs for consumers, the states are taking the lead in combating the high drug prices with a variety of bipartisan efforts.

Under a new Connecticut law, for instance, drug companies must justify price increases for some drugs if the price rises by at least 20 percent in one year or 50 percent over 3 years. Insurers must identify their 25 most expensive drugs and the 25 drugs with the largest cost increases when they file their annual rate requests with the state insurance department.

California has adopted a law that requires manufacturers to provide advance notice of price increases, along with a detailed statement of the reasons for the increases. The manufacturers have filed suit to block the law, claiming it is “unprecedented and unconstitutional.”

A Nevada law requires the manufacturers of diabetes medicines, including insulin, to report the production costs for each drug, the amount of money spent to market it, the profits earned on its sales, and the amount of rebates paid to PBMs for sales of the drug in that state. In Oklahoma, payment for prescription drugs will soon be based on how well the drugs work. The new laws and bills don’t just apply to brand-name drugs, either: Maryland has banned “price gouging,” which it defines as an unconscionable increase in the price of any “essential off-patent or generic drug.”

Some states are also making adjustments to their Medicaid programs. New York has imposed an annual cap on its Medicaid drug spending. In Ohio, Medicaid officials announced that PBMs will no longer be allowed to keep the payments that they receive from drug manufacturers; instead, the money must be passed along to Medicaid health plans and used for the benefit of Medicaid recipients.

Source: The New York Times, August 18, 2018