Reducing the soaring prices of commonly used prescription drugs has become a political priority in the nation’s statehouses. So far this year, 258 bills that sponsors hope will assist consumers in managing pharmaceutical costs have been filed in 47 states, with 29 of them enacted.
Many of the measures require more transparency from drug providers, pharmacy benefit managers (PBMs) and pharmacists. Some bills echo a bipartisan measure passed last year by Congress that allows pharmacists to provide more information to patients to help them save on costs.
But most of the nation’s state attorneys general believe that such transparency does not address the root cause of price increases, which they blame on a conspiracy among pharmaceutical companies to maintain high prices.
Connecticut Attorney General William Tong, a Democrat, joined by attorneys general from 43 other states, has filed a lawsuit alleging that the largest generic manufacturers have conspired to artificially manipulate prices for more than 100 generic drugs, including treatments for arthritis, asthma, diabetes and cancer.
“We have hard evidence that shows the generic drug industry perpetrated a multibillion-dollar fraud on the American people,” Tong said.
“We have emails, text messages, telephone records and former company insiders that we believe will prove a multiyear conspiracy to fix prices and divide market share for huge numbers of generic drugs.”
A spokesman for Teva Pharmaceutical Industries, an Israel-based firm that is the largest company named in the suit, denied the allegations.
The effort to reduce drug costs is not confined to legal and legislative fronts.
In California, Democratic Gov. Gavin Newsom has proposed an executive order that will attempt to use the Golden State’s immense purchasing power to reduce drug costs.
On the day he was sworn into office, Newsom said he intended to leverage California’s status as the world’s fifth-largest economy to demand lower prices from drug companies for millions of Medicaid enrollees, state government workers and, eventually, Californians in the private sector.
Leaders in Los Angeles County, the nation’s most populous, have agreed to partner with the state.
“California is leading the nation in holding drug companies accountable and fighting prescription drug prices,” Newsom said in announcing the partnership. “We will use our market power and our moral power to demand fairer prices for prescription drugs.”
But it’s unclear if this proposal will work.
Diana Dooley, the respected director of the California Department of Health and Human Services under Newsom’s predecessor, Gov. Jerry Brown, said the state is at a disadvantage because many drugs are required by law or regulation for treating various medical conditions, and the state can’t reject a specific drug just because it costs too much.
“You can’t have more purchasing power if you can’t say no to the provider,” she said.
James Robinson, who heads the UC Berkeley Center for Health Technology, makes a similar point. He told the Sacramento Bee soon after Newsom unveiled his plan that he was “skeptical’ that aggregating purchasing power gave California much of an added advantage.
“At the end of the day, what gives bargaining leverage for a purchaser is if you say, ‘if you don’t give me a discount, I won’t buy your product,” Robinson said.
Nonetheless, pharmaceutical companies are likely to remain under pressure because of public concern about the cost of prescription drugs.
A Kaiser Family Foundation survey found that a majority of adults said prescription drugs had improved their lives but that the costs were unreasonable. A quarter of those polled said it was “difficult” to afford the drugs they need. In the survey, 80 percent said pharmaceutical company profits were a major factor in the high cost of drugs.
The Kaiser Family Foundation has long found that drug price increases have exceeded the inflation rate. This year, the list price of more than 3,000 drugs increased, while the price of only 117 went down, according to data compiled by Rx Savings Solutions.
A revealing study published recently in the journal JAMA Network Open found a substantial, industry-wide increase in insurer and out-of-pocket costs for brand-name prescription drugs.
In the study, researchers from the Scripps Research Translational Institute analyzed Blue Cross Blue Shield pharmacy claims from 2012 to 2017, focusing on 49 brand-name drugs that had more than 100,000 total claims each.
All but one of the drugs included in the study saw increases. The cost of 36 of the drugs increased over the six-year period by more than 50 percent, and the cost of 16 more than doubled. Overall, the median cost of the drugs included in the study increased 76 percent.
Both the federal government and the states have focused on lack of transparency in drug pricing, making pharmacy benefit managers the principal targets.
PBMs administer prescription drug coverage for insurers and employers. They develop and maintain formularies, process claims, and negotiate discounts and rebates for millions of Americans who have health insurance through a variety of private and government plans.
The PBM field is dominated by OptumRx, Express Scripts and CVS Caremark. These three firms together have more than 70 percent of the PBM business and wield power that rivals the power of the drug companies, says Erin Taylor, a health economist at the RAND Corporation.
Until 2018, PBMs were largely banned from disclosing PBM practices to their customers. Then states began stripping away the secrecy, allowing pharmacists to discuss PBM charges and other cost factors with their customers.
President Donald Trump’s administration took up the cause, resulting in the aforementioned federal law prohibiting gag orders that passed the Senate last December with only two dissenting votes. Thirty states then had similar laws; the number has since risen to 33 with passage of such laws by Montana, New Mexico and Wyoming.
Starting in July, the Trump administration will require drug companies to list prices of prescription drugs in television ads. But this commendable effort falls considerably short of Trump’s promise in his 2016 campaign to lower drug prices. In campaign speeches he accused drug makers of “getting away with murder.”
To be fair, states have also fallen short, getting higher marks for increasing transparency than for reducing drug prices.
It might have been otherwise. Several states expressed interest in an ambitious Maryland law that would have banned drug companies from “unconscionable” increases in prescription drug prices.
But in 2018 an appellate court found this language vague and struck down the law. Maryland appealed to the U.S. Supreme Court, which declined to review the lower court decision.
States are still trying. On June 11, Florida Gov. Ron DeSantis, a Republican, signed a bill that could eventually give Floridians access to less expensive drugs from Canada and other foreign countries.
He said the bipartisan bill, passed over intense lobbying by the domestic pharmaceutical industry, is necessary because Americans spend far more for prescription drugs than residents of other countries.
“We were going up against the greatest force in America, which is Big Pharma,” state House Speaker José Oliva, R-Miami Lakes, said in describing the hard-won passage of the bill.
The measure requires approval from the Health and Human Services Department, which DeSantis, a Trump supporter, predicted would happen. If so, the bill would come back to the Florida Legislature for final action and funding.
Vermont last year became the first state in the nation to enact a prescription-importation law but has not submitted an application for federal approval. A similar measure passed the Maine Senate the same day as the Florida bill but requires further votes before becoming law.
Meanwhile, House Speaker Nancy Pelosi, D-Calif., has proposed requiring HHS to negotiate the prices of at least 25 prescription medicines a year with the drug companies. But this plan does not interest the Trump administration and, according to Politico, has enraged left-of-center Democrats who want bolder remedies.
It may be that meaningful reductions in drug pricing are impossible to address separately from other health-care costs, such as hospital rates and medical charges, which are also rising.
The United States pays far more than any other country in the world for health care, Dooley observes.
“The problem of controlling drug prices is similar to controlling prices in health care as a whole,” she said. “No one wants to give up anything.”
— Lou Cannon, a Summerland resident, is a longtime national political writer and acclaimed presidential biographer. His most recent book — co-authored with his son, Carl — is Reagan’s Disciple: George W. Bush’s Troubled Quest for a Presidential Legacy. Cannon also is an editorial adviser to State Net Capitol Journal, which published this column originally. Click here to read previous columns. The opinions expressed are his own.
