A bipartisan group of 17 legislators from 11 states and Puerto Rico convened in Portland, Ore., this summer to learn from experts, and each other, about state-led initiatives to address prescription drug access and affordability.
During this one-day convening the lawmakers weighed in on topics such as insulin affordability, pharmacy benefit manager (PBM) reforms, price and cost transparency for generic and brand-name drugs, prescription drug affordability boards (PDABs), and containing drug costs in Medicaid. This report highlights key themes from the meeting discussions.
Insulin is often in the spotlight in discussions of prescription drug affordability. To help patients with their insulin copayment, 24 states and the District of Columbia have capped how much a state-regulated health plan can charge, with amounts ranging from $25 to $100 for a 30-day supply.
Aside from copay caps, states have pursued other initiatives, such as limiting what patients pay for diabetic supplies and public-private partnerships to manufacture insulin.
Pharmacy Benefit Manager (PBM) Reforms
PBM reform has attracted legislative attention the past few years and was the subject of a quarter of enacted state legislation so far in 2023. PBMs negotiate rebates from manufacturers for placement on a health plan’s formulary and with pharmacies for participation in their network. These rebates, and the effect they have on the dynamics of the prescription drug market, were a primary point of discussion among the policymakers. One option that sparked interest is requiring all rebates, discounts and price concessions to be passed through, either to plan sponsors or to consumers at the point of sale.
Arkansas requires PBMs to pass rebates on to health plan enrollees at the pharmacy counter. Similarly, PBMs in Indiana must pass rebates on to health plan enrollees at the point of sale or to health plans to reduce premiums. Colorado requires PBMs or health insurers to demonstrate to the Division of Insurance that 100% of rebates are used to reduce costs.
Price and Cost Transparency
Over a dozen states have passed price and cost transparency measures. This patchwork of state laws allows states to collect data from manufacturers, health plans, PBMs and other supply chain entities. Legislators agreed that transparency requirements may help states gain access to specific data but translating it into actionable policy may prove difficult.
Prescription Drug Affordability Boards (PDABs)
Legislation to prop up a prescription drug affordability board, or PDAB, has passed in eight states. Four states—Colorado, Maryland, Minnesota and Washington—authorize the PDAB to establish upper payment limits, or the highest amount state purchasers will pay. These boards have received both praise and skepticism. While the group expressed a desire to have useful data, they questioned whether PDABs are the most effective tool. Moreover, some attendees were troubled that PDABs could be both fiscally and administratively onerous for states.
Containing Drug Costs in Medicaid
Manufacturers are bringing cures to the market for debilitating and sometimes fatal conditions such as sickle cell anemia. These advancements have brought hope to patients that, until now, had few treatment options. But these therapies can pose significant cost barriers for state Medicaid agencies, and state legislators are considering various options to address this challenge.
Some states are choosing to carve out some classes of drugs from their Medicaid managed care (MCO) contracts. Value-based payment models are another alternative being explored. States must first get a state plan amendment approved by the Centers for Medicare & Medicaid Services to enter into these models. Twelve states have an approved state plan amendment, of which seven have a value-based model agreement in place with a manufacturer.
To address the high cost of cell and gene therapies, new financing models are emerging. Also spurring the group’s curiosity was reinsurance—where the financial risk of these products is transferred to another insurer.
Legislators in attendance came away with valuable insight from their colleagues into promising strategies to address prescription drug costs and access. As policymakers seek solutions for their constituents, they can rely on NCSL to be their go-to resource for the latest information. NCSL maintains a vast library of information on these topics through NCSL’s Prescription Drug Policy Resource Center.
The NCSL Prescription Drug Peer Learning Group was supported through a grant from Arnold Ventures.