Battle over drug prices shifts back to the states

President Trump has derided pharmaceutical companies as “getting away with murder,” but there’s been little action in Washington to rein in the costs of prescription drugs.

Some states are taking matters into their own hands. California passed a new law that requires pharmaceutical companies to explain a drug’s price tag, and other states are considering similar measures.

“This is not an issue that’s going away, and it’s clear that patients are demanding action on this topic, and if they can’t succeed on the federal level, then they’re going to the states,” said Rachel Sachs, an associate law professor at the Washington University School of Law.

{mosads}On Monday, California Gov. Jerry Brown (D) signed drug pricing transparency legislation that supporters call the most robust law to date.

“Sacramento is proving we will lead where the folks in Washington, D.C., won’t,” California state Senate President Pro Tempore Kevin de León (D) said at a news conference Monday.

The new law requires drug companies to notify purchasers at least 60 days in advance before raising a price tag by more than 16 percent in a two-year period. Manufacturers would have to explain why the cost increased.

“Certainly all eyes are on California,” said Trish Riley, the National Academy for State Health Policy’s executive director. “It’s a very comprehensive bill, and it could well be a model for other states.”

A trade group for the drug industry slammed the bill as being “based on misleading rhetoric instead of what’s in the best interest of patients.”

“There is no evidence that SB 17 will lower drug costs for patients because it does not shed light on the large rebates and discounts insurance companies and pharmacy benefit managers (PBMs) are receiving that are not always being passed on to patients,” said Priscilla VanderVeer, a spokeswoman for the Pharmaceutical Research and Manufacturers of America (PhRMA), in a statement.

“Nothing in SB 17 will help patients get the benefits of the savings that insurance companies and PBMs are getting.”

A handful of states have passed other drug pricing measures.

Last year, Vermont became the first state to put a law on its books requiring drugmakers to justify price hikes. The state will craft an annual list of up to 15 drugs that increased in price at least 50 percent over five years or 15 percent or more over one year. The makers of those drugs will then be required to explain the increase.

New York has a new law that caps prescription drug spending in its Medicaid program.

In Maryland, the state attorney general can take action if an off-patent or generic drug’s price drastically increases. And in Nevada, a new law focuses on increasing the transparency of insulin pricing for people with diabetes. Both measures are facing lawsuits from the drug industry.

Drug companies have argued that critics fail to recognize the value medicines are bringing and say the state-level regulations could thwart the distribution of life-saving drugs.

In response to California’s measure, PhRMA said “it’s time to move beyond creating new, costly bureaucratic programs that don’t make a dent in patients’ costs for medicines. We stand ready to work with policymakers on new innovation strategies that emphasize value while bringing down costs and expanding access to needed medicines.”

The Association for Accessible Medicines, a group representing generic drugmakers, said states’ “one-size-fits-all legislation is a disservice to patients.”

“I don’t think state lawmakers totally appreciate the savings that generics provide to their state,” Allen Goldberg, an AAM spokesman, said. “We also see a lot of burdensome reporting that is a part of a lot of the bills that are being passed, and we worry that that is going to chill generic competition and not encourage it.”

Prescription drug legislation and ballot measures have led to costly battles in the states.

Voters shot down a California ballot measure on drug prices that would have mandated that state agencies not pay more for drugs than the Department of Veterans Affairs. The fight over the ballot measure cost more than $100 million, with most of the money spent by drug companies fighting the measure. Ohio is taking up the same bill in November.

In Washington, D.C., lawmakers have put drug company CEOs in the hot seat, berating them for increasing the prices of certain drugs. They’ve launched investigations and introduced a host of bills, yet there hasn’t been any concrete movement on the issue in Congress thus far.

The pharmaceutical industry has also come under criticism from Trump, particularly on the campaign trail. Details leaked over the summer of an executive order on drug pricing he was crafting. But that order hasn’t been issued, and critics say it’s favorable to the drug industry.

So states are pressing ahead with their own measures.

“I think going from an idea to a law is a lot easier at the state level in a certain way, and I think it’s just a popular issue and there’s a lot of popular momentum around it,” said Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation. 

States are required to balance their budgets, making the “unpredictability of price increases” a challenge for states, for eaxmple when budgeting for  their Medicaid programs or a state university. 

Dozens of bills on drug pricing were filed in state legislatures this year, and advocates are hoping to rack up wins in more states next year.

“We are very encouraged by a) the number of states that took this on last session and b) the wide range of states who have this either in the hopper or at top of their agenda for next session,” said Ben Wakana, the executive director of Patients for Affordable Drugs.

States are “the laboratories of innovation,” Riley said.

“There’s been that history in states trying things that become models for the federal government.”