2018 State Legislative Conference October 25 - 27, 2018 Ft. Lauderdale, FL

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PRESCRIPTION DRUG PRICING
LEGISLATION
OCTOBER 26, 2018
J e n n i f e r R e c k , M A
N a t i o n a l A c a d e m y f o r S t a t e H e a l t h P o l i c y
( N A S H P )
American Academy of Family Physicians
State Legislative Conference

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NASHP
 Non-profit, bipartisan
 Portland, ME & DC
 Academy = state leaders
 31 years serving states
 Legislative & executive
branches: AGs, Insurance
departments, Exchanges, Cost
Commissions, Medicaid, Public Health,
State employee health plans, Governor’s
offices, Legislators and staff
Pharmacy Cost Work Group
/Center for State Rx Pricing
 Funded by Laura and John Arnold Foundation

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Why Are States Acting on Drug Prices?
• Rx price increases - rapid and unpredictable
• Rx pipeline (specialty drugs, biologics, immunotherapy)
= costs will continue to rise
• State Medicaid Rx Spending:
• 25% 2016; 14% in 2015
• CMS predicts 6% growth 2016-2025
• No federal consensus on action despite President’s “Blueprint”
• States can’t wait on Feds
• e.g. 28 states banned “gag clauses” before Congress
• Rx issues cross the partisan divide

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Drug Spending in Context
Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for
Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
4

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How Are States Approaching Rx Costs?
• 2018 Session: 171 Bills
• 28 States Passed 45 New Laws on Drug Costs:
• PBMs – 92 Bills (31 laws)
• Transparency – 26 Bills (7 laws: OR, VT, ME,
NH, CT, CA*, NV*)
• Wholesale Importation – 9 Bills (1 law: VT;
Utah reported to Legislature Oct. 1)
• Price Gouging – 13 Bills (1 law: MD*)
• Rate Setting – 3 Bills: MD, NJ, MN
(*= enacted in 2017)

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2018 PBM Enacted Legislation
 Bans gag clauses: 19 laws
 Limits patient cost-sharing: 14 laws
 Permits or mandates disclosure of a drug’s out-of-
pocket costs with and without insurance and/or
availability of generic options: 12 laws
 Requires PBMs to be licensed by the state: 8 laws
 Requires PBMs to report pricing and rebate
information: 6 laws
 Prevents price spreading: 2 laws

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PBMs: Lessons Learned
 Define rebates as all payments between
manufacturers and PBMs.
 PBMs are part of the problem, not the problem –
Addressing drug costs requires understanding – and
taking action – across the supply chain.

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State Transparency Law
Requires reporting from…
Health
Plans
PBMs
Manufacturer
Price
Increases
Manufacturer
Launch Price
Other
California (SB 17) X X X
Connecticut (HB 5384) X X X X
Maine (LD 1406)
*Study only
X
Nevada (SB 539)
*Only relates to diabetes drugs
X X
Pharmaceutical sales
reps. & manufacturer
donations to non-profit
organizations
New Hampshire (HB 1418)
*Study only
X X
Oregon (HB 4005) X X X
Vermont (S 92) X X X
Maryland’s Price Gouging Law
(MD 631)
*law’s main focus is not on transparency
X
Louisiana’s PBM Laws (SB
283 & HB 436)
*law’s main focus is not on transparency
X
Transparency Laws

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Transparency Laws
 CA (SB17) – Requires advance notice of price increases
 60-day notice by manufacturer’s of increases >16% w/in previous 2
yrs.
 Insurers report top 25 drugs (most frequently prescribed/highest
spend/cost increases)
 PhRMA challenge; implementation in progress since Jan. 2018
 NV (SB539) – Essential diabetes drugs only
 PhRMA and BIO challenged (disclosure of proprietary info.)
 OR (HB 4005) – Similar to CA; rule-making in progress
 CT (HB 5384) – Threshold: 20% in 1 yr or 50% in 3 yrs;
 VT (S 92) – update to 2016 law
 ME (LD 1406) and NH (HB 1418) - Studies

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Maximizing the Impact of Transparency
 Goal = to better understand prices & to enable action
 Proprietary information:
 Don’t collect unless necessary
 Create mechanisms to protect from public disclosure
 Work collaboratively with manufacturers to avoid undue
reporting requirements / ensure compliance
 Align data across states as possible:
 NASHP Transparency Implementation Network will produce:
 A common, core data set / data dictionary (& secondary set)
 A roadmap for implementing transparency
 Reporting protocols
 A template for a searchable database that states can adapt

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Price Gouging
 Maryland law (MD 631):
 Allows AG to take action against “unconscionable” price
increases and impose fines & refunds for consumers if AG
determines price gouging took place
 Generic/off-patent drugs
 AAM challenged MD 631; 4th Circuit ruled against MD; MD AG
filed appeal to SCOTUS on October 19, 2018
 Lessons Learned:
 Define “unconscionable”
 Make clear law applies to drugs sold within state only

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Prescription Drug Affordability Board
 Similar to a public utility rate review commission
 Would establish a Rx drug affordability review
commission to review high cost drugs and, when
necessary, set rates state will pay
 Maryland (HB 1194/1023)
 To establish a Prescription Drug Affordability Board with the
authority to set rates
 Passed House; stalled in Senate

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Wholesale Importation from Canada
 Passed in VT (S175)
 Study in Utah; report filed with leg. on October 1
 NASHP TA to VT :
 Designing a program to meet safety and cost-savings
requirements for approval by feds
 Azar recently signaled support for importation
 VT must approve program design including funding
mechanism
 State will contract with a wholesaler

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Medicaid Alternative Payment Models
Oklahoma
 OK Medicaid has entered into three separate APMs directly w/drug
manufacturers (first-in-nation)
 State and manufacturer agree upon outcome(s) to measure
 Additional rebates are based on performance against agreed-upon
measure
 Example: As adherence targets are met- which result in greater usage,
sales and outcomes- the price the state pays for the drug decreases
Colorado
 Colorado is surveying physicians to determine their actual acquisition
cost (AAC) for physician administered drugs (PADs)
 Results will be used to design a more transparent APM based on
average acquisition cost (2019)

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Take-Aways
1) Transparency is a first step - necessary but not
sufficient.
2) Transparency is needed across the entire supply
chain.
3) States need policy approaches with teeth, e.g.:
 Anti-price gouging measures with authority to take action if
price gouging occurs
 Drug affordability boards with the authority to set rates

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What do we expect in 2019?
More movement on:
 Transparency
 Drug Affordability Boards
 Price gouging
 Importation
 PBMs (spread pricing)

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NASHP Center for State Rx Pricing Website
New Laws 2017-2018: https://nashp.org/new-laws/
NASHP’s legislative tracker:
 https://nashp.org/state-legislative-action-on-pharmaceutical-
prices/
Other available resources include:
 Model legislation on Transparency, Rate Setting, Importation
& PBMs https://nashp.org/model-legislation/
 Legal Resources: https://nashp.org/legal-resource-center/
 Glossary of Rx Terms: https://nashp.org/glossary-of-
pharmaceutical-terms/

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Advocacy Resources
Patients for Affordable Drugs
 David Mitchell
 Arnold Foundation initiative
Maryland Citizen’s Health Initiative
 Vinnie DeMarco
 Price gouging / Drug Affordability Review Board
 “Drugs don’t work if you can’t afford them”
Employer Coalitions
 National Business Group on Health
 Pacific Business Group on Health

19. Questions?
Jennifer Reck, MA
NASHP
jreck@nashp.org