States, White House gear up to bring prescription costs down
Pill bottles from a piñata are scattered on the sidewalk during a protest against the price of prescription drug costs in front of the U.S. Department of Health and Human Services building on October 06, 2022, in Washington, DC. Anna Moneymaker via Getty Images
Maryland’s prescription drug affordability board will evaluate eight drugs for potential cost reduction. The federal government could help move the process along, one expert says.
From January 2022 to January 2023, drug manufacturers raised the prices of more than 4,200 medications. More than 46% of those cost increases outpaced the rate of inflation, and the average price jump was $590 per product. In the midst of skyrocketing prices, the Biden administration is working with pharmaceutical companies to lower costs, and nearly half of U.S. states have established or have pending legislation to create prescription drug affordability boards to cap or limit prescription costs for consumers and insurers.
Maryland was the first state to establish a board in 2019, which last month released its first list of the medications that could be evaluated for affordability. Out of more than 2,000 eligible drugs, the board identified eight that likely pose affordability challenges to consumers and health plan payers. The prescriptions cover a range of conditions, including diabetes, heart and kidney disease, HIV and neurodivergence.
In whittling down the list of drugs for cost review, board members considered criteria like a drug’s cost per patient, its out-of-pocket cost for consumers and the difference between its list price and net price, said Andrew York, executive director of the Maryland Prescription Drug Affordability Board. In general, the board prioritized drugs that were expensive for patients and to the state’s health plan overall.
The next step is a 30-day public comment period that will give the board insights from consumers and other stakeholders, in addition to insurance claims data, which is the board’s primary source of information, York said. Plus, a council of stakeholders like pharmacists, drug companies and insurers will contribute to the board’s cost review and reduction efforts.
Once the medication list is finalized, then the cost of the drugs will be reviewed. If deemed unaffordable, the Maryland board has the authority to set upper payment limits for government purchasers, such as public employee health plans or Medicaid programs.
As one expert pointed out in an earlier interview with Route Fifty, states are watching how Maryland’s cost reduction efforts will play out to inform their own plans for developing drug review boards.
In the meantime, the federal government will add another valuable data point to the affordability review process, said Maureen Hensley-Quinn, senior program director at the National Academy of State Health Policy, or NASHP.
In accordance with the 2022 Inflation Reduction Act, the U.S. Secretary of Health and Human Services is negotiating with drug manufacturers to lower prices for certain medications under Medicare Part D and Part B.
The Medicare Drug Price Negotiation Program has selected 10 medications for cost reduction under Medicare Part D, which is slated to go into effect starting in 2026. The federal list includes prescription drugs that address conditions like diabetes, heart and kidney complications, autoimmune disorders and cancer. They largely overlap with the types of medications states are looking to address in their affordability reviews, Hensley-Quinn said.
The lower prices the federal government is able to negotiate for Medicare could be another consideration for state prescription affordability boards reviewing similar medications, she said.
“As Medicare is setting forth to negotiate directly with manufacturers to get lower drug prices for their population, understanding what those lower prices will be could be an important data point for affordability review boards as they … work to understand drug affordability and compare costs with value,” Hensley-Quinn said.
“But all of this is very new and happening in real time,” she added. “We will see, honestly, in the next few months, how all of this starts to take place.”
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