Members of Congress have railed on the pharma industry and its pricing for years, but alas no tangible proposals on the issue have gained steam. Instead, state governments are tackling pricing head on with new proposals around the country, and the industry is largely resisting.
Already in Maryland, Nevada and California, lawmakers have passed bills challenging the drug pricing status quo in different ways. But that's just the start, according to PwC's Health Research Institute, as state lawmakers proposed 75 healthcare bills in 2017; 21 passed, according to the team.
"No longer content to merely ask manufacturers or providers to report their costs, states are considering and passing new laws to directly control prices and shine light on cost changes," wrote authors of a HRI report detailing trends to expect for 2018. As HRI notes, Florida, New York and Vermont are among a group of other states acting on drug pricing.
In California, SB 17 will require companies to give 60-day notice of price hikes above 16% when combined with increases from the previous two years. It'll also force companies to justify their increases and force insurers to provide info about how drug prices affect premiums. Some of the information will be public on a government website.
Maryland is taking on "unconscionable" price hikes in the generic sector, while Nevada's bill looks to shine a light on pharmacy benefit makers and drugmakers specifically in the diabetes space.
Industry trade group PhRMA isn't happy with the changes. The industry sued against the bills in California and Nevada, while it was another organization, the Association for Accessible Medicines, that sued in Maryland. Among other arguments, PhRMA said both the California and Nevada laws are "unprecedented and unconstitutional" because they impact commerce in other states.
In Arizona recently, officials requested for the ability for its Medicaid program to refuse coverage of certain pricey breakthrough drugs and drugs that have therapeutic equivalents. Essentially, the state is pushing for the power to manage a prescription drug formulary, as private payers do each year to pressure drugmakers for better rebates and discounts.
Currently, the state's Medicaid system is restricted from managing coverage and must pay for all drugs that are part of a rebate agreement between drugmakers and the HHS. Massachusetts has made a similar inquiry. A PhRMA spokesperson responded that while the specific details are unknown, "as a general matter, ... PhRMA would oppose a proposal to limit access to prescription drugs in Medicaid in light of the legal covenant that conditions the availability of Medicaid rebates on unrestricted access for patients.”
Of course, not all state level pricing proposals will make their way into law. Voters in Ohio recently rejected a ballot initiative that proposed limiting drug prices for state agencies to those paid by the U.S. Department of Veterans Affairs. The initiative contained a stipulation that taxpayers pay for attorney fees in defense of the law, and it overwhelmingly failed. California voters rejected a similar proposal last year despite support from prominent pharma critic Sen. Bernie Sanders, I-Vt.
In response to the Ohio initiative going down, a PhRMA representative said voters "rejected this flawed proposal because they understood the devastating consequences it could have had on Ohioans."
Clearly, despite the fact that Congress can't come to an agreement on how to tackle drug costs, state governments are interested in the issue and drug pricing will remain a national conversation. As states increasingly take pricing into their own hands, the trend could create a new hurdle for drugmakers as they navigate different requirements around the country.