States May Expand Drug Price Review Boards to Curb Costs

by Peter Johnson

In response to rising drug prices, some states have launched prescription drug review boards designed to make medicines more affordable. So far, the boards control prices mainly for states' Medicaid and state employee plans, but some states are considering whether to set up panels that would also work to set upper payment limits for prescription drugs in commercial insurance.

A new report by Manatt found that 17 states so far have implemented or introduced legislation for boards that exercise some influence on drug prices, primarily in state Medicaid plans and commercial plans in which the state government is the plan sponsor. The report found that six states — Maine, Maryland, Massachusetts, New Hampshire, New York and Ohio — have such boards in place.

Jeff Myers, senior vice president for market access and reimbursement strategies at Catalyst Health Care Consulting, says that the drug-affordability boards have had a mixed impact on prices so far.

"They have had an impact, but generally on classes where there are several products from which to choose," Myers tells AIS Health via email. "Smaller classes without significant overlap on labels for competing products are generally less successful."

Sandy Robinson, the author of the Manatt report and a managing director at the firm, says drug manufacturers have raised concerns that the boards will make previously confidential pricing information public. However, she emphasizes that the figures arrived at by the boards are not rebates or commercial agreements.

She observes that most of the state boards have limited impact on drug prices in the commercial market, since they manage costs for state-controlled plans.

However, that could be changing. Trish Riley, executive director of the National Academy for State Health Policy (NASHP), says some states have begun to pursue drug-affordability boards that would operate in the commercial market. NASHP originated the idea for commercial prescription drug rate-setting boards and has drafted model legislation for the concept.

"Ours is not a rebate model, nor is it a pricing model," Riley tells AIS Health. "Drug[makers] say, 'This is the price, pay it.' So what [our policy] does is say, 'Nope, we're going to set a payment limit within the state that commercial payers will pay.'"

From RADAR on Drug Benefits