States Take Actions on Drug Costs

From RADAR on Drug Benefits

Though the spotlight recently has been trained on President Trump's blueprint to rein in drug prices, there's already been a plethora of state-level legislation concerning drug prices and reimbursement.

Earlier this month, a three-judge panel in the Eighth Circuit Court of Appeals unanimously struck down a law enacted in Arkansas back in 2015 that requires PBMs to reimburse pharmacies for generic drugs at or above the cost the pharmacy paid to acquire the drug. Meanwhile, in April, a different three-judge panel struck down a Maryland law that prohibits price gouging for "essential drugs."

Gerard Anderson, a health policy professor at the Johns Hopkins Bloomberg School of Public Health, says that such laws often don’t stand up to legal scrutiny. "This happens all the time when you’re first passing the law at the state level — you don't quite get it right," he says. "And so you learn from your mistakes, and you make modifications."

That said, it can be difficult for states to target drug costs through legislation and should be done at the national level, according to Anderson.

Another type of law that's faced legal pushback concerns drug-price transparency.

One of the most visible was a California law enacted last October, which requires drug manufacturers to give public and private purchasers 90 days' advance notification — and justification — when they raise the price of certain drugs, according to the National Conference of State Legislatures (NCSL).

Another noteworthy transparency law comes from Nevada, which forces drugmakers to report the costs of marketing and manufacturing all essential anti-diabetes medications and requires them to justify price hikes for such drugs that exceed a set amount.

On the PBM regulation side, Colleen Becker at the NCSL says it's possible that additional states will aim to assign fiduciary duty to PBMs. Yet it remains unclear whether any of these measures will have a tangible impact on drug prices and costs.

Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.