On Drug Pricing, States Step In Where Washington Fails

Originally posted by The New York Times.

President Trump continues to vent about high drug prices, most recently in his State of the Union speech. Democrats like Senators Bernie Sanders and Claire McCaskill keep proposing legislation to curb rising medicine costs.

But these pronouncements may not be worrying drug companies too much. They can see that for all of his bluster, the president has not embraced any significant reforms, and that Democrats don’t get much support on anything from the Republicans who control Congress.

Brian Sandoval, however, is another story. He’s the governor of Nevada, and a Republican. Him, they worry about.

Last June, Sandoval praised a new Nevada law that requires manufacturers of insulin to disclose more details about why have increased prices as much as 325 percent in recent years. Surrounded by people with diabetes who struggle to afford the higher cost of insulin, Sandoval said that his own grandfather also had diabetes. “He’s somebody that I saw suffer because of that,” Sandoval said. The new law, he added, is going “to make a difference, I believe, with regard to transparency in drugs for those suffering from diabetes, and transparency for insulin.”

According to the National Academy for State Health Policy, a nonprofit organization that supports states in seeking solutions to health issues, more than 130 pieces of legislation on prescription drug pricing were introduced in statehouses last year. Several became law. Maryland, for example, empowered its attorney general to sue generic drug manufacturers whose prices rose more than 50 percent in a year. California enacted a requirement for pharmaceutical companies to give notice and justification for large price increases. Like the Nevada legislation that Sandoval signed into law, the Maryland and California bills enjoyed strong bipartisan support.

At the same time, Louisiana’s health secretary is considering asking the federal government to bypass a drugmaker’s patent on an expensive hepatitis C drug. New York has imposed a cap on the growth of the state’s Medicaid spending on prescription drugs.

States are partly responsible for funding the Medicaid program, which with 70 million beneficiaries is the country’s largest insurer. When Medicaid’s prescription costs are added to state obligations to pay for medicines for public employees and prisoners, state governments spend more than $20 billion a year on prescription drugs.

That number has been rising fast, producing particular urgency at the state level, since most state governments are required to maintain a balanced overall budget.

Lawmakers are also under pressure to act from their constituents. One in five Americans reports skipping medicine doses or failing to fill prescriptions each year because of cost, and polls show that as many as 82 percent support changing laws to lower prices.

“State lawmakers know two things: the feds are not going to do something about drug prices anytime soon, and states have to pay the price,” said Trish Riley of the National Academy for State Health Policy.

So states have embraced their role as laboratories of democracy, a description invoked in a Supreme Court decision by Justice Louis Brandeis, in 1932. Recent precedent for states leading the way in health care include the Children’s Health Insurance Program and even the structure of the Affordable Care Act, both of which were rolled out in states before becoming federal law.