prescription drug pill bottle

Lawmakers are seeking ways to save to help their constituents save money on prescription drugs.

Prescription Drug Trends: Pharmacy Benefit Manager Reform, Affordability Boards and More

By Colleen Becker | Jan. 28, 2022 | State Legislatures News | Print

Prescription drug access, pricing and costs remain high on lists of issues bound for legislative action in 2022. But what themes will carry over from last session, and what new ideas might emerge?

Looking back, 2021 brought a surge of legislative momentum: By year’s end, legislators had enacted 114 bills in 36 states. Although most legislatures are just starting their sessions, lawmakers in 25 states have already filed 120 bills. A major theme has emerged: “How can policymakers save their constituents money and trim state budgets?”

Although most legislatures are just starting their sessions, lawmakers in 25 states have already filed 120 prescription drug bills.

One trend that consistently remains at the forefront is pharmacy benefit manager, or PBM, reform. These laws took the lion’s share of 2021 enacted legislation—at least 49 laws in 30 states. Eighteen states already have 37 PBM bills up for debate. PBMs are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers and other payers.

PBM reform can be approached in a variety of ways: requiring PBMs to register or obtain licensure in the state; implementing data transparency and reporting requirements; and having companies compete for a state’s business via a reverse auction.

With a reverse auction, PBMs submit contract proposals through an online portal; the lowest bid wins the contract. New Jersey, the first state to implement a reverse auction, reports an annual reduction in drug spending of $500 million. Total savings over the five-year term of the contract is on track to reach $2.5 billion. Colorado, Louisiana and Maryland enacted this strategy last year.

Drug Affordability Boards

Although saving money in the state budget is top of mind for many lawmakers, improving access to medicines and making them more affordable for consumers are also top concerns.

One idea gaining traction is to create a prescription drug affordability board, also known as a PDAB. These nongovernmental agencies are tasked with identifying drugs with the highest cost and the highest usage in the state and looking for ways to reduce state spending. Six states—Colorado, Maine, Maryland, New Hampshire, Ohio and Oregon—have established PDABs. A unique provision in Colorado’s PDAB law, which was enacted last year, allows the board to establish upper payment limits on certain high-cost drugs. Massachusetts and New York each created a Drug Utilization Review Board, which is like a PDAB. So far, two states are showing interest in establishing a PDAB in 2022.

Among the drugs a PDAB might consider is insulin. Insulin access and affordability have been at the core of many policy discussions. Nineteen states limit the amount consumers pay for their insulin. To bolster access to diabetic supplies, some states mandate coverage of continuous glucose monitors, or CGMs. These devices help people with diabetes monitor their blood sugar levels and are more accurate and easier to use than the traditional finger-stick methods. Taking this a step further, West Virginia lawmakers have proposed in this session limitations on copayments for CGMs.

Copay Coupons, Programs

The use of manufacturer copay coupons and copayment adjustment programs, also known as copay accumulator or maximizers, are drawing increased scrutiny from legislators. Copay accumulator programs limit the impact of a manufacturer’s coupon on a patient’s annual out-of-pocket costs. Advocates say that manufacturer coupons can be critical in helping lower a patient’s cost sharing. Opponents of copay coupons say these offers drive patients to high-cost products rather than cheaper or generic alternatives of the same drugs.

Currently, 12 states and Puerto Rico address copay adjustment programs by requiring payments made by a third party to be applied to the patient’s annual deductible. Other states, including Arkansas and California, do not allow manufacturer coupons in certain circumstances. So far, six states are addressing these issues in 2022.

These are but a few of the topics states are considering. NCSL will keep a close eye on developing trends and innovative proposals in 2022.

Colleen Becker is a senior policy specialist in NCSL’s Health Program.

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