For policymakers focused on prescription drug affordability and access, 2023 has been an active year. Of the more than 800 bills proposed across all 50 states, Washington, D.C., and Puerto Rico, nearly 150 were enacted. The year’s major legislative trends included pharmacy benefit manager reforms, lowering patient costs and increasing access, and curbing high drug prices.
Pharmacy Benefit Managers
For the past decade, states have tried to rein in drug costs by addressing certain business practices of pharmacy benefit managers, or PBMs. This year proved no different, with one-quarter of prescription drug legislation aimed at PBM reforms.
Legislative interest focused on rebates that PBMs negotiate from manufacturers on behalf of health plans for formulary placement. However, not all patients benefit from rebates. Consumers with high deductible plans or plans with coinsurance—an amount based on the undiscounted price of the medicine—may not benefit from negotiated rebates and may still have to pay higher drug costs. Legislation enacted this year ensures consumers in Arkansas and Indiana will now pay a price that takes rebates and other price concessions into account. Indiana’s law goes a step further by requiring all rebates be passed through to plan sponsors to reduce premiums.
Texas legislators turned their attention to rebates in their state employee plans. Instead of contracting with multiple PBMs to administer the prescription drug benefit, the Texas Pharmaceutical Initiative will establish a board to contract with a single PBM to pass through all rebates and provide transparent pricing for state entities served by the initiative. The board will also have the authority to explore partnerships to launch a manufacturing facility for generic or biosimilar drugs.
Patient Costs and Access
Helping people afford their medicines remains a focal point for states. New laws in Montana and Nebraska bring the total number of states limiting the copay for insulin to 23, plus the district. An Illinois bill creates an insulin discount program and lowers the monthly out-of-pocket cost for insured patients from $100 to $35. Beginning in 2024, West Virginians with state-regulated plans may receive financial relief for certain diabetic devices such as continuous glucose monitors, which are now capped at $100 per month.
Three states—Colorado, Illinois and Rhode Island—were the first in the nation to cap the copay of epinephrine. Similarly, Delaware placed epinephrine on the lowest cost-sharing tier of insurers’ formularies.
While some states prioritized the out-of-pocket cost of epinephrine, others, including California, Colorado, South Carolina and Virginia, required that certain educational settings have epinephrine on hand.
In addition to limits on copayments, patients may be able to lower their out-of-pocket costs at the pharmacy counter by using a manufacturer’s coupon. Amid concerns that these coupons may drive up health care costs, some health plans and PBMs have initiated copay accumulator programs that prevent a manufacturer’s copay assistance from counting toward a patient’s deductible or out-of-pocket maximum. Colorado, New Mexico, Texas and the district are now among 21 states and territories that restrict the use of these programs. North Dakota will, instead, study how these programs impact health systems and patients—not only their pocketbooks but their ability to stick to their drug regimen.
Providers often are reimbursed for clinician-administered, high-cost specialty drugs through a process called buy-and-bill, where a provider buys a drug from a wholesaler and bills the payer at a higher amount to cover medication storage and administrative fees. Because this markup can vary extensively across providers and payers for the same drug, some PBMs and health plans have introduced “white-bagging” and “brown-bagging” policies.
White-bagging means a provider purchases medication already prepared for the patient from a specialty pharmacy. Brown-bagging refers to medication the patient receives from the pharmacy and must then transport to a provider for administration. Concerns raised about white- and brown-bagging include limits on patient access, increases in out-of-pocket costs, safety risks and waste. Bills passed in Florida, Minnesota, North Dakota, Texas and Utah bring to 13 the number of states restricting white- or brown-bagging practices, or both.
Prices
Rising drug prices continue to dominate many political discussions. Though a new era of government price negotiations has begun with the federal Inflation Reduction Act, or IRA, some states still chart their own course.
With new legislation in 2023, prescription drug affordability boards, or PDABs, are an alternative eight states are exploring, with four already in various stages of implementation. Minnesota authorized its new board to set an upper payment limit and apply the maximum fair price negotiated under the IRA to drug purchases in the state. The newly formed PDAB in New Jersey will need to consider the impact of its recommendations on drug research and development, among other factors, when evaluating the affordability of high-cost drugs.
For years, lawmakers have considered importing drugs at cheaper prices from other countries, such as Canada. Although there have been renewed efforts by a handful of states to pursue these contracts, they have not been approved by the federal government. Despite that, Texas could become the ninth state to create and fund a program of its own.
Introducing generics or biosimilars to the market spurs competition to lower drug prices. But loopholes in the patent system may stymie market entry. For example, brand-name drug manufacturers may offer patent settlements to generic companies, which might discourage bringing a lower-cost product to market. California took steps to address these deals in 2019 by requiring drug companies to demonstrate to state agencies that a transaction is not anticompetitive. This session, Texas passed legislation directing insulin manufacturers to report to the state Health and Human Services Commission if a generic or biosimilar equivalent is unavailable due to a pay-for-delay contract.
Looking Ahead
Of this year’s numerous prescription drug bills, many have received bipartisan support and sustained momentum year over year. As legislators shift their focus toward elections in 2024, both parties will likely herald the successes of the 2023 session to increase access and control drug costs, then resume that work in January. NCSL will share new developments as they unfold.
Visit NCSL’s Prescription Drug Policy Resource Center for more information.
Colleen Becker is a senior policy specialist in NCSL’s Health Program.