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PRESCRIPTION DRUG PRICING
LEGISLATION
OCTOBER 26, 2018
J e n n i f e r R e c k , M A
N a t i o n a l A c a d e m y f o r S t a t e H e a l t h P o l i c y
( N A S H P )
American Academy of Family Physicians
State Legislative Conference
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NASHP
Non-profit, bipartisan
Portland, ME & DC
Academy = state leaders
31 years serving states
Legislative & executive
branches: AGs, Insurance
departments, Exchanges, Cost
Commissions, Medicaid, Public Health,
State employee health plans, Governor’s
offices, Legislators and staff
Pharmacy Cost Work Group
/Center for State Rx Pricing
Funded by Laura and John Arnold Foundation
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Why Are States Acting on Drug Prices?
• Rx price increases - rapid and unpredictable
• Rx pipeline (specialty drugs, biologics, immunotherapy)
= costs will continue to rise
• State Medicaid Rx Spending:
• 25% 2016; 14% in 2015
• CMS predicts 6% growth 2016-2025
• No federal consensus on action despite President’s “Blueprint”
• States can’t wait on Feds
• e.g. 28 states banned “gag clauses” before Congress
• Rx issues cross the partisan divide
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Drug Spending in Context
Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for
Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
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How Are States Approaching Rx Costs?
• 2018 Session: 171 Bills
• 28 States Passed 45 New Laws on Drug Costs:
• PBMs – 92 Bills (31 laws)
• Transparency – 26 Bills (7 laws: OR, VT, ME,
NH, CT, CA*, NV*)
• Wholesale Importation – 9 Bills (1 law: VT;
Utah reported to Legislature Oct. 1)
• Price Gouging – 13 Bills (1 law: MD*)
• Rate Setting – 3 Bills: MD, NJ, MN
(*= enacted in 2017)
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2018 PBM Enacted Legislation
Bans gag clauses: 19 laws
Limits patient cost-sharing: 14 laws
Permits or mandates disclosure of a drug’s out-of-
pocket costs with and without insurance and/or
availability of generic options: 12 laws
Requires PBMs to be licensed by the state: 8 laws
Requires PBMs to report pricing and rebate
information: 6 laws
Prevents price spreading: 2 laws
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PBMs: Lessons Learned
Define rebates as all payments between
manufacturers and PBMs.
PBMs are part of the problem, not the problem –
Addressing drug costs requires understanding – and
taking action – across the supply chain.
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State Transparency Law
Requires reporting from…
Health
Plans
PBMs
Manufacturer
Price
Increases
Manufacturer
Launch Price
Other
California (SB 17) X X X
Connecticut (HB 5384) X X X X
Maine (LD 1406)
*Study only
X
Nevada (SB 539)
*Only relates to diabetes drugs
X X
Pharmaceutical sales
reps. & manufacturer
donations to non-profit
organizations
New Hampshire (HB 1418)
*Study only
X X
Oregon (HB 4005) X X X
Vermont (S 92) X X X
Maryland’s Price Gouging Law
(MD 631)
*law’s main focus is not on transparency
X
Louisiana’s PBM Laws (SB
283 & HB 436)
*law’s main focus is not on transparency
X
Transparency Laws
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Transparency Laws
CA (SB17) – Requires advance notice of price increases
60-day notice by manufacturer’s of increases >16% w/in previous 2
yrs.
Insurers report top 25 drugs (most frequently prescribed/highest
spend/cost increases)
PhRMA challenge; implementation in progress since Jan. 2018
NV (SB539) – Essential diabetes drugs only
PhRMA and BIO challenged (disclosure of proprietary info.)
OR (HB 4005) – Similar to CA; rule-making in progress
CT (HB 5384) – Threshold: 20% in 1 yr or 50% in 3 yrs;
VT (S 92) – update to 2016 law
ME (LD 1406) and NH (HB 1418) - Studies
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Maximizing the Impact of Transparency
Goal = to better understand prices & to enable action
Proprietary information:
Don’t collect unless necessary
Create mechanisms to protect from public disclosure
Work collaboratively with manufacturers to avoid undue
reporting requirements / ensure compliance
Align data across states as possible:
NASHP Transparency Implementation Network will produce:
A common, core data set / data dictionary (& secondary set)
A roadmap for implementing transparency
Reporting protocols
A template for a searchable database that states can adapt
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Price Gouging
Maryland law (MD 631):
Allows AG to take action against “unconscionable” price
increases and impose fines & refunds for consumers if AG
determines price gouging took place
Generic/off-patent drugs
AAM challenged MD 631; 4th Circuit ruled against MD; MD AG
filed appeal to SCOTUS on October 19, 2018
Lessons Learned:
Define “unconscionable”
Make clear law applies to drugs sold within state only
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Prescription Drug Affordability Board
Similar to a public utility rate review commission
Would establish a Rx drug affordability review
commission to review high cost drugs and, when
necessary, set rates state will pay
Maryland (HB 1194/1023)
To establish a Prescription Drug Affordability Board with the
authority to set rates
Passed House; stalled in Senate
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Wholesale Importation from Canada
Passed in VT (S175)
Study in Utah; report filed with leg. on October 1
NASHP TA to VT :
Designing a program to meet safety and cost-savings
requirements for approval by feds
Azar recently signaled support for importation
VT must approve program design including funding
mechanism
State will contract with a wholesaler
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Medicaid Alternative Payment Models
Oklahoma
OK Medicaid has entered into three separate APMs directly w/drug
manufacturers (first-in-nation)
State and manufacturer agree upon outcome(s) to measure
Additional rebates are based on performance against agreed-upon
measure
Example: As adherence targets are met- which result in greater usage,
sales and outcomes- the price the state pays for the drug decreases
Colorado
Colorado is surveying physicians to determine their actual acquisition
cost (AAC) for physician administered drugs (PADs)
Results will be used to design a more transparent APM based on
average acquisition cost (2019)
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Take-Aways
1) Transparency is a first step - necessary but not
sufficient.
2) Transparency is needed across the entire supply
chain.
3) States need policy approaches with teeth, e.g.:
Anti-price gouging measures with authority to take action if
price gouging occurs
Drug affordability boards with the authority to set rates
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What do we expect in 2019?
More movement on:
Transparency
Drug Affordability Boards
Price gouging
Importation
PBMs (spread pricing)
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NASHP Center for State Rx Pricing Website
New Laws 2017-2018: https://nashp.org/new-laws/
NASHP’s legislative tracker:
https://nashp.org/state-legislative-action-on-pharmaceutical-
prices/
Other available resources include:
Model legislation on Transparency, Rate Setting, Importation
& PBMs https://nashp.org/model-legislation/
Legal Resources: https://nashp.org/legal-resource-center/
Glossary of Rx Terms: https://nashp.org/glossary-of-
pharmaceutical-terms/
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Advocacy Resources
Patients for Affordable Drugs
David Mitchell
Arnold Foundation initiative
Maryland Citizen’s Health Initiative
Vinnie DeMarco
Price gouging / Drug Affordability Review Board
“Drugs don’t work if you can’t afford them”
Employer Coalitions
National Business Group on Health
Pacific Business Group on Health
Though only a portion of spend compared to hospitals and providers; Rx is where consumer most often feel the pinch – therefore the tremendous public pressure to act
CA – (no injunction granted though one was sought)
NV – lawsuit dropped after NV agreed not to disclose proprietary information to public ( no injunction granted though one was sought)