States are taking more aggressive action to curb drug costs. It’s self-preservation. Prescription drug expenditures are nearly 20 percent of U.S. health care costs.
According to the National Academy for State Health Policy, more than 30 states have either passed or are considering more than 60 bills designed to make drug pricing more transparent, to identify the costs that contribute to drug prices, and to make the business practices of pharmacy benefit managers (PBMs) easier to understand. PBMs are third-party administrators (TPAs) of prescription drug programs for health plans. PBMs managed pharmacy benefits for 266 million Americans in 2016.
Most recently, Maryland has put into place new legislation that will prevent price spikes for pharma drugs. The new law provides the state’s attorney general with the authority to step in if a manufacturer or wholesale distributor of generic or off-patent drug raises prices 50 percent or more in a single year. If the company cannot justify the price increase, it can be taken to court and can face a fine of up to $10,000. California, New York and Nevada are considering similar legislation.
Richard Cauchi, health program director at the National Conference of State Legislatures, told Kaiser Health News: “There is a noticeable uptick among state legislatures and state governments in terms of what kind of role states can play in addressing the cost of prescription drugs and access.”
