State Leaders Offer Solutions to Address Rapid Increase in Prescription Drug Spending

New Findings from Rx Work Group Released at National Health Event

Pittsburgh, PA – The National Academy for State Health Policy (NASHP) today released findings from their Pharmacy Costs Work Group aimed at addressing the increasingly rising costs of pharmaceuticals. The findings were released as part of their 29th Annual State Health Policy Conference, held 17-19 in Pittsburgh, PA.

The solutions offered in the newly released findings serve as a toolbox for states. While they recognize the value of the pharmaceutical industry, state policymakers have for some time been engaged in considerable work to maintain the affordability of prescriptions. Despite these efforts drug pricing and the unpredictability of increases continues to vex state budgets. Annually states spend more that $20 billion on prescription drug coverage for public employees, incarcerated individuals, higher education, and Medicaid.

“This is another example where states can be the innovators,” said Trish Riley, Executive Director of NASHP. “ Much like with CHIP, HIPAA, and the ACA, big national health reforms have often followed the states’ leads and now they are committed to leading the way on reining in drug prices.”

The findings outline 11 specific proposals ranging from regulatory interventions to more market-oriented approaches for states to consider when developing policies to help control rising pharmaceutical costs. The proposals focus on consumer protections, increasing oversight and price regulation and coordinating state purchasing power across public employees, Medicaid and Corrections

The findings outline 11 specific proposals:

  1. Increase price transparency to create public visibility and accountability;
  2. Create a public utility model to oversee in-state drug prices;
  3. Bulk purchase and distribution of high-priced, broadly-indicated drugs that protect public health;
  4. Utilize state unfair trade and consumer protection laws to address high drug prices
  5. Seek the ability to re-import drugs from Canada on a state-by-state basis;
  6. Pursue Medicaid waivers and legislative changes to promote greater purchasing flexibility;
  7. Enable states to operate as pharmacy benefit managers to broaden their purchasing and negotiating powers;
  8. Pursue return on investment pricing and forward financing approaches to allow flexible financing based on long-term, avoided costs;
  9. Ensure state participation in Medicare Part D through Employer Group Waiver Plans;
  10. Protect consumers against misleading marketing;
  11. Use shareholder activism through state pension funds to influence pharmaceutical company actions.

NASHP’s Pharmacy Costs Work Group is comprised of state leaders from governors’ staff, state legislatures, Medicaid programs, public employees, attorney generals’ offices, state-based insurance exchanges, comptrollers’ offices, and corrections departments. The group aimed to find new approaches to limit pharmaceutical costs by examining the many levers state governments have as policymakers, regulators, and purchasers. The group will reconvene and meet with representatives of PhRMA next month.

Read the full paper.

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The National Academy for State Health Policy (NASHP) is an independent academy of state health policymakers who are dedicated to helping states achieve excellence in health policy and practice. A non-profit and non-partisan organization, NASHP provides a forum for constructive work across branches and agencies of state government on critical health policy issues. For more information visit www.nashp.org.