Utah’s Norman Thurston Takes a Red State Approach to Lower Rx Costs with a Bill to Import Drugs from Canada

Dr. Norman Thurston, Representative, Utah State Legislature Director, Office of Health Care Statistics, Utah Department of Health
Dr. Norman Thurston, Representative, Utah State Legislature
Director, Office of Health Care Statistics, Utah Department of Health

For more than a decade, Utah State Legislator and Director of the Office of Health Care Statistics Norman Thurston has worked to reform his state’s health care system, including its Medicaid program, and is considered one of the state’s “go-to” health care policymakers.

Thurston, a Republican, has worked to reduce state spending on prescription drugs and is a member of the National Academy for State Health Policy’s (NASHP) Pharmacy Cost Work Group and its Health Care Access and Financing Committee. Sensitive to his state’s aversion to regulations, he is taking a unique approach to reining in drug costs by proposing legislation to import prescription drugs from Canada.

Recently, NASHP caught up with Thurston at its 30th Annual State Health Policy Conference in Portland, OR, to ask him about his prescription drug initiative.

How did you get interested in health care policy?
When I was in graduate school for applied microeconomics looking for field of emphasis, someone suggested I look into heath care because of the expected growth in health economics research. It turned out to be excellent advice. (Thurston, a Utah native, has a masters and PhD in economics from Princeton.)

How did you come to work for lower prescription drug costs?
NASHP suggested that states look at this. In the health care statistics world we are of course always looking at costs, and I love looking at data, so this was naturally an interesting question.

You have sponsored a bill to import drugs from Canada, where most prescription drugs cost a fraction of what they do in the United States. Why did you choose that approach instead of proposing a bill to regulate drug costs?
First, federal law already allows importation of drugs to happen, and passing a rate-setting bill (with a cost control commission that regulates drug costs like a public utility) may be fine for some blue states, but it’s not very appealing to a red state like Utah. We decided to look at something creative, and importing drugs fit our abilities.

Utah is unique in its politics and approach. We’re dealing with an industry that has a lot of market power, and you need to address market power with market power. The State of Utah pays for drug benefits for a quarter of its population (including state and local government employees and retirees, teachers, and Medicaid enrollees.) At some point, we need to say, ‘as a major drug purchaser, why aren’t we getting a better deal?’ Other major purchasers such as Canada and Europe are getting a much better deal than us.

Where does the bill stand today?
We’re drafting it now and working with stakeholders, including payors, public employee health plans, regional health carriers, retail pharmacists, and pharmacy benefit managers. Drug manufacturers are interested too, though perhaps not in the way we want them to be just yet.

The constituency I worry the most about in terms of how they will react to this idea is the free market conservatives, many of them are not sure how to react. Drug manufacturers are given a patent on their product and they have a monopoly. So how much latitude should we give someone as a monopolist? How should we approach this and talk about it?

Then why not take a rate-setting approach toward this monopoly?
Politically, it wouldn’t fly in Utah, far more people would have a problem with it and would wonder how would state government would know what’s a fair drug price? But when it comes to importing drugs from Canada, there are drugs that cost more in Canada and there are some that cost 10 percent of what they cost here. We need to figure out what they are and how to gain some real savings.

What’s the hardest aspect about convincing Utah to import drugs from Canada?
Most of it is logistics, how do we get them here, labelled correctly, and distributed to patients? It’s a logistics issue, not a philosophical one, and there are ways of addressing it. Our next session starts in late January. I’d like to have a solid draft of the bill in mid-December and start circulating it for comment and feedback.

Could you have done this without NASHP?
I think some things would have happened without NASHP, but NASHP has found a way to bring us together and move the dial forward and ramp it up. I like the 11-point report we produced on drug price controls that has gotten a lot of people’s attention and I’m surprised at the number of states that are doing things.

Thurston can be both a state lawmaker and employee because, he explained, the Office of Health Care Statistics performs objective tasks such as collecting and analyzing data about health care cost and quality and therefore avoids any conflict of interest when it comes to policymaking.