Two weeks after California’s governor announced plans to produce generic drugs, 18 national Blue Cross Blue Shield plans said they will join with the non-profit Civica Rx to produce lower-cost generic drugs.
As summarized in the National Academy for State Health Policy’s Jan. 13, 2020, blog Can States Really Produce Generic Drugs? The Civica Rx Model May Show the Way, Civica Rx offers states a working model to purchase less-costly generic drugs directly from overseas manufacturers, and it has plans to manufacture them directly.
Civica’s model was originally designed by hospital systems to make sure they had needed generic drugs to provide directly to patients. A state model that follows the Civica Rx template is expected to take into consideration costs, distribution channels, and other logistics to assure these generics can be provided safely and at lower costs to payers and consumers.
Insurers have been increasingly active in the prescription drug cost arena – some own pharmacy benefit managers. Aetna is owned by CVS Health and now these Blue Cross Blue Shield plans, which insure 40 million consumers, are linking with Civica Rx to produce lower-cost generic drugs.
For states, this holds the promise of lower costs for consumers, but it also invites oversight to make sure the savings insurance plans achieve on lower-cost generic drugs are passed on to consumers.
The Civica Rx business model currently contracts with foreign drug manufacturers and takes advantage of a US Food and Drug Administration (FDA) provision – Abbreviated New Drug Applications – that expedites the approval process for certain drugs. Civica Rx has its own National Drug Code and through this process can assure that foreign-manufactured drugs meet FDA standards for safety.
Civica Rx now has 18 drugs in production, including naloxone, steroids, drugs to prevent side effects from chemotherapy, and the beta blocker metoprolol tartrate, used to treat high blood pressure.
Along with 18 other plans in the Blue Cross Blue Shield Association, Blue Shield of California is joining with Civica Rx to initially produce cheaper versions of five to ten costly generic drugs by 2022.
Paul Markovich, president and CEO of Blue Shield of California, said in a press release that his company wants to provide “competitive alternatives” to its members. “The only way to do it is to create a strong, competitive alternative, which is what we’ve done with the Civica Rx partnership,” Markovich explained. “Anytime a drug is off-patent, it’s an opportunity for us to create an alternative and ensure that consumers are getting high-quality drugs that are also affordable. This is a first step for us, and there is more to come.”
Markovich indicated he supports California Gov. Gavin Newsom’s initiative to lower health care costs and produce generic drugs. “We look forward to working with the governor and his team on how this could potentially contribute to that effort. Our partnership with Civica Rx could serve the purposes that he and his team have in mind and could be a launching pad for his effort.”
NASHP’s Prescription Drug Pricing Center is following this initiative closely and is developing additional approaches that states could pursue to lower costs for consumers and directly address the high price of drugs.
Last week, Gov. Gavin Newsom captured national attention when he announced California’s intention to produce its own generic drugs, building on earlier state efforts. Last year, the governor issued an executive order charging public payers to combine their purchasing power to negotiate better prices, and to eventually expand to include other payers in the state.
The idea to produce generics has roots in the efforts of 10 health systems, including Intermountain Healthcare, Mayo Clinic Health System, Providence, and Trinity Health, among others, that came together to address generic drug shortages and rising prices. With support from Arnold Ventures, the Peterson Center on Health Care, and the Gary and Mary West Foundation, they launched the nonprofit Civica Rx in 2018.
The Civica Rx business model currently contracts with foreign drug manufacturers and takes advantage of a new US Food and Drug Administration (FDA) provision – Abbreviated New Drug Applications – that expedites the approval process for certain drugs. Civica Rx has its own National Drug Code and through this process can assure that foreign-manufactured drugs meet FDA standards for safety. Currently, 18 drugs are in production, including naloxone, steroids, drugs to prevent side effects from chemotherapy, and the beta blocker metoprolol tartrate, used to treat high blood pressure.
Through Civica’s contract with London-based Hikima, the third-largest supplier of injectable generic drugs, the anticoagulant drug heparin sodium is now sold to participating hospitals. Through the Danish company Xellia Pharmaceuticals, two injectable antibiotics are also available. Civica reports that it currently serves 1,200 US hospitals and that participating hospitals agree to:
- Pay the same price for each drug;
- Price transparency; and
- The same contract terms.
Civica’s model is designed for and by hospital systems to make sure they have needed generic drugs that they can provide directly to patients. A state model that follows the Civica Rx template is expected to take into consideration costs, distribution channels, and other logistics to assure these generics can be provided safely and at lower costs to payers and consumers.
There are assuredly lessons to learn from the success of Civica Rx, and all eyes are now on California to lead the way for states.
When exploring new evidence about the effectiveness of telehealth, state policymakers want to know which interventions consumers prefer and are scalable for a range of populations. In addition to working to ensure that new telehealth tools are evidence-based and effective, officials want to make sure both patients and providers are interested in utilizing them.
The National Academy for State Health Policy’s (NASHP) Telehealth Affinity Group recently convened to discuss two studies funded by the Patient-Centered Outcomes Research Institute (PCORI):
- One ongoing study in rural Alaska is testing how well a new school-based screening and referral process – combined with a telemedicine consultation – can expedite the diagnosis of hearing loss in children. In the 15 participating communities, children are screened for hearing loss at school. Under the usual model, parents of children identified as needing a follow-up consultation are sent a letter with a request to take their child to a clinic. Under the intervention, the school and clinic work together to schedule a telemedicine appointment, during which a community health aide who is on-site at the local clinic works with specialists at a remote location to do follow-up testing. While the study does not yet have full results, the region saved $18 million in 2016 and 91 percent of patient travel to specialists was avoided. Data will be collected until February 2020.
- Another study investigated the use of patient portals – secure websites where patients can view health records and electronically communicate with doctors – among adults with chronic diseases in the Kaiser Permanente Northern California health system. Researchers wanted to understand how portal use impacted patients’ utilization of health care services. Among the eligible participants, 68 percent of patients created a patient portal. Portal use was associated with more office visits, fewer emergency department visits, and fewer preventable hospitalizations. Although portal use was connected to better outcomes, the results were somewhat limited as the study focused on a closed health care system. It is also difficult to discern if patients’ portal engagement impacted their behavior. For instance, it is unclear if these patients may have been proactive participants in their care even without the portal.
In response to these telehealth studies, affinity group members expressed their interest in understanding:
- How can an intervention be scaled to diverse populations? Would the rural, school-based intervention also work in urban areas? Could a similar telehealth invention be successful for adults who need follow-up care?
- How do patient preferences impact the adoption of telehealth? To what extent does the evidence support the success of a specific intervention itself, versus a specific population’s interest in utilizing it?
- What is the appropriate role of state officials in promoting evidence-based telehealth?
Scaling Interventions to Broad Populations
As affinity group members explore new evidence about telehealth, they expressed the desire to better understand how an intervention can be scaled to meet the needs of the populations they serve. The Alaska hearing loss study is of particular interest to officials because it offers a promising approach that could be adapted to connect a range of rural or underserved communities to specialists. The affinity group was very interested in the projected savings and how the community-focused design could be applied to their own states.
Members expressed skepticism about the applicability of the patient portal tool for the populations they serve. State officials questioned how this intervention might be scaled beyond a closed, integrated health system like Kaiser Permanente. For example, would an investment into an online portal for a state’s Medicaid population – some of whom may not have the same access to the internet as other higher-income populations – yield the same improved health outcomes?
Patient Preferences Impact Telehealth Adoption
A prominent theme from the discussions of both of the studies was the importance of patient preferences for care. Officials noted that evidence-based interventions that improve outcomes or lower costs must still be supported by patients and providers in order to warrant investment. As more telehealth evidence emerges, particularly relating to patient-focused tools, policymakers want to understand how likely members of their targeted populations are to use telehealth.
The Role of State Officials in Promoting Telehealth
Beyond adaptability, state officials want to know how they can invest or most effectively promote the adoption of telehealth through their roles as payers and/or regulators. Officials wonder if there could be opportunities to use existing funding to pay for or incentivize use of patient-directed telehealth tools, like an online portal, to work toward improved health outcomes for targeted populations. There is also interest among the affinity group in considering how state agencies could promote or encourage community-level collaboration, similar to the Alaska example, to implement a successful telehealth intervention.
While the two studies prompted more questions, state officials value the research investment in telehealth. While the affinity group discussions often raise issues outside the scope of testing specific interventions, researchers may benefit from understanding the broader context state officials work within when making or changing policy. It is critical for state officials to understand scalability, how to engage diverse, dynamic populations or to have tools to decide whether or not their states can make the investments needed to implement new interventions.
NASHP’s Telehealth Affinity Group will continue to meet and discuss emerging PCORI research on telehealth in the coming months. To learn about the group’s first meeting, read the NASHP blog, States Explore Emerging Evidence to Learn New, Innovative Uses of Telehealth.
As prescription drug price increases greatly outpace inflation and new specialty drugs priced in the millions of dollars enter the market, several states have led the way as early adopters of drug price transparency legislation and are taking the first steps to curb costs with the help of transparent drug pricing information.
A new National Academy for State Health Policy (NASHP) report, What Are We Learning from State Reporting on Drug Pricing?, offers a cross-state analysis of drug price transparency findings through August 2019, based on reports from California, Maine, Nevada, Oregon, and Vermont. States are:
- Learning which drugs cost the most – and are the best targets for focused strategies;
- Tracking the percentage of health premiums attributed to drug spending – and identifying opportunities to leverage reporting on drug spending, such as implementing spending caps; and
- Beginning to capture information on net price – and profit – along the supply chain to inform fair and balanced policy approaches to ensure affordability.
Honing in on the Costliest Drugs to Take Action Where It Matters Most
States with transparency laws are identifying the drugs creating the greatest affordability challenges for both payers and consumers. State transparency laws require gathering data from a variety of sources, including through required reporting by public and private health plans (California, Oregon, Vermont), or through all-payer claims databases (Maine), or proprietary databases (Nevada), in order to report lists of:
- The costliest drugs in the state based on price and utilization;
- The drugs with the highest year-over-year cost growth; and
- The most commonly prescribed drugs.
A cross-state analysis of these reports identified 30 drugs that appear in common across drugs reported in three of five states. Many of the drugs reported are used for the treatment of diabetes, including Humalog, Lantus Solar, Novolog, Januvia, Metformin, and Victoza. Multiple drugs for the treatment of arthritis were also identified across states: Stelara, Cosentyx, Enbrel, and Humira.
Identifying the classes of drugs – and specific drugs within those categories – that are creating the greatest affordability challenges can help states hone in on strategies to address drug costs. For example, states working to leverage their purchasing power across agencies are seeking this type of information to guide potential approaches such as bulk purchasing or establishing single preferred drug list. State officials from Nevada have credited their transparency law, initially limited to diabetes medications and since expanded to include asthma medications, with bringing payers to the table to leverage their purchasing power through Nevada’s Silver State Scripts program.
Illuminating the Link between Rising Drug and Insurance Premium Costs
Several states (California, Vermont, and Oregon) require commercial health plans subject to state regulation to submit information on the impact of prescription drug spending on premiums rates. Results shared publicly to date include a range of prescription drug spending accounting for, on average, 13 percent in California, 15.67 percent in Vermont, and up to 18 percent of premiums in Oregon. Tracking prescription drug spending, as part of rate review or other initiatives, represents an important leverage point for states to take action on drug spending. Doing so can enable, for example, monitoring and enforcement of prescription drug spending caps. Several states, including New York, Massachusetts, and Maine, have established caps for drug spending – New York and Massachusetts have the authority to negotiate supplemental rebates to meet their caps while Maine tasks its Drug Affordability Review Board with identifying strategies to meet its voluntary cap on drug spending for public plans.
Uncovering the Factors Driving Up Prices along the Drug Supply Chain
One of the questions at the heart of drug price transparency laws is: What factors are driving high price increases and high launch prices? The only way for a state to determine the actual causes of high drug prices – and the relative profit accrued by players in the supply chain – is by requiring reporting across the entire supply chain, including manufacturers, pharmacy benefit managers (PBMs), wholesalers, and health plans. In order to be meaningful, this information must shed light on the net cost of drugs – an otherwise closely guarded secret behind a black box of secret rebate negotiations between manufacturers and PBMs.
Some of the early adopter states, while laying the foundation for future transparency efforts, enacted laws with limitations in terms of their ability to shine a light on net prices or to uncover the interplay between players in the drug supply chain. California, for example, limits manufacturer reporting to information that is already in the public domain. While Nevada did require reporting of some information considered to be trade secrets, and required reporting by both manufacturers and PBMs, the lack of alignment in reporting requirements (e.g., state versus national level) makes it difficult to “follow the money” across the supply chain.
A new wave of tougher state transparency measures, including a 2019 Maine law, An Act To Further Expand Drug Price Transparency, will have the ability to shine a light on net drug prices – and profits – in order to guide fair and effective state policy solutions. The Maine law, based on NASHP’s model legislation, requires reporting by entities across the entire drug supply chain, including manufacturers, PBMs, wholesalers, and health plans.
In addition to establishing reporting requirements with the ability to produce meaningful, actionable data, states must also have the ability to enforce reporting their new requirements. Early efforts at collecting data from manufacturers have yielded imperfect compliance at best. California received data justifying price increase from only one-third of manufacturers required to report, and Nevada recently levied $17.4 million in fines on manufacturers for failure to report in that state. While non-reporters in Nevada face fines up to $5,000 a day, Maine’s new law increases that penalty to up to $30,000 a day.
Taking Action on What Transparency Reveals
As actionable information on net drug prices and profits across the supply chain becomes available, states will use the data to make informed, impactful policy decisions. Though state policymakers are challenged by a number of limits on their authority to regulate drug prices, and meaningful action at the federal level currently remains pending, states are advancing a number of policy options to address drug prices building on what transparency laws are revealing. One model is a state Drug Affordability Review Board (DARB) with the authority to review data on drugs deemed unaffordable, and if warranted, set an upper payment limit for that drug within the state. Transparency data is essential to DARBs and related efforts. Such approaches do not seek to prohibit profit along the supply chain, but to ensure that those profits are reasonably balanced with the need to preserve access to essential drugs by ensuring their affordability.
This report summarizes what states are learning from reporting required by prescription drug price transparency laws, which include reports on data submitted by health insurers, manufacturers, and pharmacy benefit managers (PBMs). The review period includes reports published by states through August 2019. The National Academy for State Health Policy’s Center for State Rx Drug Pricing, with support from Arnold Ventures, commissioned this analysis from experts affiliated with Mathematica.
This report summarizes what states are learning from reporting required by prescription drug price transparency laws, including reports on data submitted by health insurers, manufacturers, and pharmacy benefit managers (PBMs). The review period includes reports published by states through August 2019.
Costliest Drugs across States
Five states — California, Nevada, Maine, Oregon and Vermont — have published reports identifying specific drugs that are high cost, for which costs are rising fastest, and/or that are most frequently prescribed. In Nevada, these drugs include only those related to the treatment of diabetes. California, Maine, Oregon, and Vermont reported up to 126 prescription drugs across therapeutic uses. These states reported many of the same drugs—including five drugs used for treatment of diabetes and four drugs used for treatment of psoriasis, psoriatic arthritis, or rheumatoid arthritis.
Impact on Premiums
California, Vermont, and Oregon have reported impacts of retail prescription drug costs on insurance premiums, averaging 13 percent in California (before accounting for manufacturer rebates, which averaged 10.1 percent of insurers’ retail drug costs) in 2017, 15.67 percent of premiums in Vermont in 2018 (before accounting for rebates), and up to 18 percent of premiums in Oregon (after accounting for rebates) in 2018.
Manufacturer and PBM Reporting
Requiring both manufacturers and PBMs to report allows states to track drug pricing along the supply chain. As of August 2019, only Nevada had publicly reported information about manufacturer and PBM costs, focused on essential diabetes drugs. Nevada’s report indicates that:
- Production costs accounted for 29 percent of manufacturers’ estimated average revenue in 2018 for essential diabetes drugs after rebates. Administrative costs and profit each accounted for 25 percent. On average, manufacturers earned $42 in profits for every $100 spent on production and administrative cost for these drugs.
- Financial assistance to consumers accounted for 14 percent of the manufacturers’ estimated total revenues after rebates, although most manufacturers reported offering no financial assistance.
- Most of the rebates that PBMs in Nevada negotiated nationally for essential diabetes drugs were on behalf of private insurers and self-insured employer plans. PBMs retained 6.6 percent of all rebates, whether negotiated on behalf of private third parties or Medicaid.
The information these states have made public suggests some early lessons:
- States share concerns about the affordability of many of the same drugs. There may be substantial value in sharing information across states with similar confidentiality protections while reducing the burden of redundant reporting to multiple states.
- Understanding pricing across the entire supply chain, from the manufacturer to the consumer, is critical. Reporting that uses consistent concepts and measures can foster mutual understanding of facts among policymakers and stakeholders in a complex system.
- The agency responsible for obtaining data must have the authority and resources to follow up when the data are not complete or credible, if drug transparency laws are to help states develop a fair approach to ensuring that prescription drugs are affordable.
This report summarizes what states are learning from reporting required by prescription drug price transparency laws, including data reported by health insurers, manufacturers, and pharmacy benefit managers (PBMs). Since 2017, nine states have enacted drug price transparency legislation that requires such reporting.
Five of these states — California, Nevada, Maine, Oregon, and Vermont — have published reports identifying specific drugs that are high cost (defined by total spending), for which costs are rising fastest (defined as year over year increase), and/or that are most frequently prescribed (so represent high consumer exposure). In Nevada, these drugs include only those related to treatment of diabetes. California, Maine, Oregon, and Vermont included prescription drugs across all therapeutic classes. In Section 1, we present the drugs of interest that these states reported and look, in particular, at the 30 drugs of interest reported by at least three of these states.
In Section 2, we describe the impact of drug prices on health insurance premiums, as reported by three states, California, Oregon, and Vermont. These states have published the dollar amounts and/or the percentage of premiums attributed to retail prescription drugs — in California and Vermont, before manufacturer and other rebates and price discounts to insurers; and in Oregon, after rebates and price discounts.
In Section 3, we describe what Nevada is learning from the reporting required of manufacturers and PBMs. Currently, eight states have enacted laws requiring PBMs to report rebate amounts either for specific drugs or in the aggregate. These laws have taken effect in four states (Connecticut, Nevada, Texas, and Washington) as part of each state’s drug pricing transparency effort, but as of August 2019, only Nevada (for specified essential diabetes drugs) had made summary information public.
Reporting of High-Cost, High Cost-Growth, and Most Prescribed Drugs
California, Maine, Nevada, Oregon, and Vermont have reported drugs that account for high total cost or high cost growth, or because they are frequently prescribed, represent high consumer exposure. Maine derived its lists from analysis of the state’s all-payer claims database (APCD) system; California and Oregon relied on insurer reporting under special statutory authority; and Vermont relied on both insurer and Medicaid reporting. Nevada derived it list of drugs from analysis of a purchased database.
Table 1 lists the number of unique drug names reported in each state. California and Vermont reported the most extensive list of drugs: each reported on more than 120 unique drug names; Nevada, Maine, and Oregon each reported on approximately 50 unique drug names.
Table 1. Number of drugs listed in state public reports, by state
|Reporting state||Reference period||Number of unique drug names reported*|
*The number of unique drugs was developed by merging separate lists of drugs, if the state reported separate lists by reason for reporting and/or by insurer.
Source: Mathematica analysis of data reported in these reports: California Department of Managed Health Care (2018); Maine Health Data Organization (2018); Nevada Department of Health and Human Services (2018b); Oregon Department of Consumer and Business Services (2019); and State of Vermont Green Mountain Care Board (2019). See full references at the end of this report.
We matched drugs reported across these states by National Drug Code (NDC) and identified 128 unique NDCs that at least two states selected in common (shown in Appendix 1). The 30 drugs that at least three states selected in common are shown in Table 2.
These 30 drugs span multiple therapeutic classes, but several have similar therapeutic uses. Eight of the drugs are used for treatment of diabetes myelitis — including five drugs, Lantus Solostar, Novolog, Januvia, Metformin, and Victoza, which four of the five states reported in common.
At least three of the four states that did not focus only on essential diabetes drugs — California, Maine, Oregon, and Vermont — selected in common a number of additional drugs that clustered around treatment for asthma (Fluticasone Prop, Ventolin, Proair, and Symbicort); depression (Bupropion Hcl and Sertraline); hepatitis C (Harvoni and Epclusa); multiple sclerosis (Copaxone and Tecfidera); psoriasis, psoriatic arthritis, and/or rheumatoid arthritis (Stelara, Cosentyx, Enbrel, Humira Syringe, and Humira Pen); and a range of cardiovascular concerns (Eliquis, Xarelto, Hydrochlorothiazide, Atorvastatin).
Table 2. Drugs reported by three or more states, 2017-2018 (in alphabetic order of primary therapeutic use)
|NDC||Drug name||States||Therapeutic class||Primary therapeutic use||Reasons for reporting|
|00054327099||Fluticasone Prop||CA, ME, VT||Respiratory tract agents||Treatment of allergic and non-allergic nasal symptoms; long term management of asthma, COPD||Most frequently prescribed (CA, ME, VT)|
|00173068220||Ventolin||CA, ME, OR, VT||Autonomic drugs; respiratory tract agents||Treatment of asthma, acute bronchitis||Most costly (CA); highest cost increase (CA); most frequently prescribed (CA, ME, OR, VT)|
|59310057922||Proair||CA, ME, OR, VT||Beta-Adrenergic agents||Treatment of asthma, acute bronchitis||Most frequently prescribed (CA, ME, OR, VT)|
|00186037020||Symbicort||CA, ME, VT||Antiasthmatic and bronchodilator agents||Treatment of asthma, chronic obstructive pulmonary disease (COPD)||Most frequently prescribed (ME); most costly (ME, CA); highest price (VT)|
|00003089421||Eliquis||CA, ME, OR||Blood formation, coagulation, and thrombosis agents||Prevention of blood clots/stroke in people with atrial fibrillation.||Most frequently prescribed (ME); highest price increase (CA, ME); most costly (CA, ME)|
|50458057930||Xarelto||CA, ME, VT||Anticoagulants, coumarin type||Treatment/prevention of blood clots||Most costly (CA, ME); highest cost increase (CA, ME, VT)|
|50111078751||Azithromycin||CA, ME, OR||Antibacterials||Treatment of bronchitis; pneumonia, sexually transmitted diseases, and infections of the ears, lungs, sinuses, skin, throat, and reproductive organs.||Most frequently prescribed (CA, ME, VT)|
|45963014205||Bupropion Hcl||CA, VT, OR||Antidepressants||Treatment of depression||Most frequently prescribed (VT); most costly (CA); highest price increase (CA)|
|68180035302||Sertraline||CA, ME, OR, VT||Antidepressants||Treatment of depression, obsessive-compulsive disorder (OCD), posttraumatic stress disorder (PTSD), premenstrual dysphoric disorder (PMDD), social anxiety disorder, panic disorder||Most frequently prescribed (CA, ME, OR, VT)|
|00002771559||Basaglar (Kwikpen)||ME, NV, OR||Hormones and synthetic substitutes||Treatment of diabetes myelitis type 1 and 2||Highest price increase (ME, NV)|
|00002879959||Humalog (Kwikpen)||ME, NV, OR||Hormones and synthetic substitutes||Treatment of diabetes myelitis type 1||Most costly (CA, ME); highest price increase (CA, ME, NV); most frequently prescribed (CA)|
|00002751001||Humalog||CA, ME, NV, OR||Hormones and synthetic substitutes||Treatment of diabetes myelitis type 1||Most costly (CA, ME, OR); most frequently prescribed (CA); highest price increase (CA, ME, NV)|
|00088221905||Lantus Solostar||CA, ME, NV, VT||Hormones and synthetic substitutes||Treatment of diabetes myelitis type 1 and 2||Most costly (CA, ME); highest price (VT); Most commonly prescribed (ME, VT); highest cost increase (NV)|
|00169633910||Novolog||NV, ME, OR, VT||Hormones and synthetic substitutes||Treatment of diabetes myelitis type 1 and 2||Most costly (ME); highest price (OR, VT); highest cost increase (NV); most frequently prescribed (CA)|
|00006027731||Januvia||CA, ME, NV, VT||Blood glucose regulators||Treatment of diabetes myelitis type 2||Most costly (CA, ME); highest cost increase (CA, ME, VT); most commonly prescribed (CA)|
|Multiple NDCs||Metformin||CA, NV, OR, VT||Blood glucose regulators||Treatment of diabetes myelitis type 2||Most frequently prescribed (CA, OR); highest cost increase (NV, VT); most costly (CA)|
|00169406013||Victoza||CA. ME, NV, VT||Hormones and synthetic substitutes||Treatment of diabetes myelitis type 2||Most costly (CA, ME); highest cost increase (CA, NV); most frequently prescribed (CA); highest price (VT)|
|61958180101||Harvoni||CA, ME, VT||Anti-infective agents||Treatment of hepatitis C||Most costly (CA, ME); highest cost increase (CA); highest price (VT)|
|61958220101||Epclusa||CA, ME, OR, VT||Antivirals||Treatment of hepatitis C||Most costly (CA, ME); highest price (OR, VT); highest cost increase (CA)|
|16729018317||Hydrochlorothiazide||CA, ME, OR, VT||Diuretics||Treatment of high blood pressure, edema, kidney stones||Most frequently prescribed (CA, ME, OR, VT)|
|60505258009||Atorvastatin||CA, ME, OR, VT||Antihyperlipidemics||Treatment of high cholesterol and triglyceride levels||Most frequently prescribed (CA, ME, OR, VT); most costly (CA); highest cost increase (CA)|
|61958200201||Descovy||CA, ME, VT||Antivirals||Treatment of HIV-1||Most costly (CA); highest cost increase (CA, ME, VT); most frequently prescribed (CA)|
|68546032512||Copaxone||CA, ME, OR, VT||Miscellaneous therapeutic agents||Treatment of multiple sclerosis||Most costly (CA, ME); highest cost increase (CA); highest price (OR, VT)|
|64406000602||Tecfidera||CA, ME, OR, VT||Psychotherapeutic and neurological agents – misc.||Treatment of multiple sclerosis||Most costly (CA, ME, OR); highest cost increase (CA); highest price (VT)|
|57894006103||Stelara||CA, ME, VT||Immunological agents||Treatment of plaque psoriasis, psoriatic arthritis||Most costly (CA, ME); highest cost increase (CA, ME, VT); highest price (VT); most frequently prescribed (OR)|
|Multiple NDCs||Cosentyx||CA, ME, OR, VT||Immunological agents||Treatment of plaque psoriasis, psoriatic arthritis, ankylosing spondylitis||Highest price (VT); most costly (CA); highest cost increase (CA, ME, OR); most frequently prescribed (OR)|
|58406044504||Enbrel||CA, ME, OR, VT||Miscellaneous therapeutic agents||Treatment of plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, juvenile idiopathic arthritis||Most costly (ME, CA); highest cost increase (CA, OR, VT); most frequently prescribed (CA, OR); highest cost (VT)|
|00074379902||Humira (Syringe)||CA, ME, OR, VT||Gastrointestinal drugs; miscellaneous therapeutic agents||Treatment of rheumatoid arthritis, plaque psoriasis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis||Most costly (CA, ME, OR); highest price (VT); highest cost increase (CA, OR, VT); most frequently prescribed (CA)|
|00074433902||Humira (Pen)||CA, ME, OR, VT||Gastrointestinal drugs; miscellaneous therapeutic agents||Treatment of rheumatoid arthritis, plaque psoriasis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis||Most costly (CA, ME, OR); highest price (VT); highest cost increase (CA, OR, VT); most frequently prescribed (CA)|
|69097081412||Gabapentin||CA, ME, OR, VT||Anticonvulsants||Treatment/prevention of seizures, pain||Most frequently prescribed (CA, ME, OR, VT); highest expenditure (CA)|
Source: Mathematica analysis of drug website data and data reported in: California Department of Managed Health Care (2018); Maine Health Data Organization (2018); Nevada Department of Health and Human Services (2018b); Oregon Department of Consumer and Business Services (2019); and State of Vermont Green Mountain Care Board (2019).
Impact on Insurance Premiums
Three states — California, Oregon, and Vermont — have reported impacts of rising drug prices on insurance premiums. California reported that insurer payments for retail prescription drugs totaled $8.7 billion in 2017, accounting for 13.1 percent of health plan premiums that year. Specialty drugs accounted for a small minority of prescriptions (1.6 percent), but more than half (51.5 percent) of all insurer spending on retail prescription drugs.
Manufacturer rebates and consumer cost sharing lessened the impact of retail prescription drugs on premiums in California, compared to what it might otherwise have been. Manufacturer rebates to insurers equaled about 10.5 percent ($915 million) of the $8.7 billion insurers spent on retail prescription drugs. Among the 25 most frequently prescribed drugs (representing 42.8 percent of total spending on retail prescription drugs), health plan enrollees paid approximately 3 percent of the cost overall — ranging from 2.9 percent of the cost of specialty drugs to 56.6 percent of the cost of generics. Enrollees paid about 8.8 percent of the cost of the 25 most costly drugs (91.2 percent of total spending on retail prescription drugs) reported by insurers.
Vermont  reported that prescription drugs accounted for 15.67 percent of premium rates in 2018 (before accounting for manufacturer rebates and other price concessions). Expressed as a per member per month (PMPM) amount, that averaged $81.65 PMPM in 2018. Vermont also identified the three drugs contributing the most to premiums: Humira Pen, Harvoni, and Enbrel Sureclick. Specialty drugs as a category contributed most to premium increases, compared with generic or brand name drugs.
Oregon reported the impact of prescription drugs on premium rates PMPM in 2018 after accounting for manufacturer rebates or other price concessions to insurers. Insurers reported impacts that ranged from a low of 2.5 percent of premiums ($13 PMPM, or about $154 per member annually, for one insurer’s small-group plans) to 18 percent of premiums (about $85 PMPM, or more than or $1,000 per member annually, for two insurers’ small group plans, respectively. At the median, prescription drugs accounted for 11.9 percent of the premiums — nearly $53 PMPM in 2018, or about $635 annually.
Manufacturer and PBM Reporting
At present, five states — Nevada, Connecticut, Maine, Texas, and Washington — have enacted laws that require both manufacturers and PBMs to report annually. Manufacturers are required to report information on specified drugs. PBMs are required to report information about the rebates they have obtained from manufacturers — either in the aggregate (for all drugs) or for specified drugs. Requiring both manufacturers and PBMs to report offers the potential for states to track pricing along the supply chain for drugs of interest, if the state aligns the level of information that each must report.
The drug cost transparency reporting requirements in these states are shown in Table 3. Washington will require PBMs to report information for each covered drug—a provision that will enable the Washington Health Care Authority to track prices across the supply chain for each drug. Nevada requests PBM reporting on essential diabetes drugs (collectively), as specifically identified by the Nevada Department of Health and Human Services. Connecticut and Texas will require PBMs to report aggregate rebates obtained across all drugs from pharmaceutical manufacturers. In Maine, the Maine Health Data Organization will adopt rules specifying the data elements to be reported.
Table 3. States that require reporting by both manufacturers and PBMs*
|State||Manufacturers must report:**||PBMs must report:|
|Connecticut||· Total company level research and development costs for the most recent year||· The aggregate dollar amount for all rebates concerning drug formularies that PBM collected from pharmaceutical manufacturers, Including those that manufactured outpatient prescription drugs covered by the health carriers and are attributable to patient utilization of such drugs under the health care plan
· The aggregate dollar amount of all rebates excluding rebates received by health carriers
|Nevada||· Total administrative expenditures (including marketing and advertising costs)
· Profit earned and percentage of total profit attributable to the drug
· Total amount of financial assistance provided through patient assistance
· Cost associated with coupons
· Wholesale acquisition cost
· History of any increase over the 5 years including percentage increase, date of increase, and explanation
· Aggregate amount of all rebates provided to PBM’s
|· Total (aggregate) amount of rebates negotiated with manufacturers during the previous year
· Total amount of rebates retained by the PBM
· Total amount of rebates negotiated for purchases of drugs for use by Medicare and Medicaid recipients, and persons covered by third parties that are or are not governmental entities
|Texas||· Total company level research and development costs for the previous calendar year||· Aggregated rebates, fees, price concessions, and other payments from manufacturers
· Aggregated dollar amount of rebates, fees, price concessions from manufacturers that were (a) passed to insurers, (b) passed to enrollees at point of sale; and (c) retained by the PBM
|Washington||· Annual manufacturing costs
· Annual marketing and advertising costs
· Total research and development costs
· Total costs of clinical trials and regulation
· Total costs for acquisition of the drug
· Total financial assistance given by the manufacturer through assistance programs, rebates, and coupons
|· All discounts (total dollar amount and percentage discount) and all rebates received from manufacturers for each drug on the PBM’s formularies
· Total dollar amount of discounts and rebates that are retained by the PBM for each drug
· Actual total reimbursement amounts for each drug the PBM pays retail pharmacies after all fees
· Negotiated price health plan pays PBM for each drug
· Amount, terms, and conditions relating to copayments, reimbursement policies, etc.
· Disclosure of any ownership interest the PBM has in a pharmacy or health plan with which it conducts business
Sources: Connecticut HB 5384/Public Act 18-41(2018); Nevada Department of Health and Human Services (2018a); Texas HB 2536 (2019); and Washington HB 1224, Chapter 334 (2019).
* Maine also requires reporting from manufacturers and PBMs. The Maine Health Data Organization will adopt rules specifying the data elements to be reported.
** In addition to the items indicated, each state requires manufacturers to report reasons for price increases, if any.
As of August 2019, Nevada was the only state that had publicly reported information about manufacturer costs and the role of PBMs in the final cost of drugs to consumers that are privately insured or enrolled in Medicare or Medicare. Together with manufacturer reporting, reporting by PBMs offers a reasonably complete (if aggregated) picture of factors that contribute to essential diabetes drug costs in Nevada.
Nevada asks both manufacturers and PBMs to report pricing information for essential diabetes drugs in the aggregate and, in general, at the national level. Manufacturers report only one item specific to Nevada: rebates paid to PBMs for essential diabetes drugs in Nevada.
A summary of the information reported by manufacturers and PBMs, as shown in Nevada’s public report, is shown in Table 4. Because Nevada reported PBM-negotiated rebates for essential diabetes drugs ($1.9 billion) at the aggregate national level and manufacturer rebates only in Nevada and as the average aggregated across manufacturers, they cannot be compared. Such discrepancies make it impossible to track the supply chain for these drugs nationally or in Nevada. Nevertheless, some insights can be drawn within the information reported by manufacturers and PBMs, respectively.
Table 4. Summary of data reported by manufacturers and PBMs in Nevada for essential diabetes drugs
|Average amount per manufacturer (simple averages)||Percent of estimated average manufacturer revenue after rebates|
|Manufacturer-reported data for essential diabetes drugs|
|Estimated total revenue after rebates (national)*||$204,353,658||100.0 percent|
|Production cost||$58,934,388||28.8 percent|
|Administrative expenses||$65,548,748||32.1 percent|
|Cost of consumer financial assistance||$27,890,892||13.6 percent|
|Total provided through any patient prescription assistance program||$12,874,326||6.3 percent|
|Consumer coupons and consumer copayment assistance programs||$14,036,828||6.9 percent|
|Manufacturer cost of redeeming coupons and use of consumer copayment assistance programs||$979,738||0.5 percent|
|Aggregate rebates to PBMs in Nevada||$3,039,646||1.5 percent|
|Total amount (all PBMs)||Percent of PBMs’ total negotiated rebates|
|PBM-reported data for essential diabetes drugs (Nevada only):|
|Total rebates negotiated with manufacturers||$1,922,857,158||100.0 percent|
|Total rebates negotiated for persons covered by|
|3rd party governmental entities, not Medicare or Medicaid||$597,759,023||31.1 percent|
|3rd parties that are not governmental entities (potentially including self-insured employer plans)||$1,293,449,196||67.3 percent|
|Total rebates retained by the PBM||$126,754,864||6.6 percent|
Source: S. Jones, et al. (2019), Tables 4, 5 and 6.
*Calculated as the sum of all shown manufacturer-reported amounts excluding aggregate rebates to PBMs in Nevada.
- Manufacturer cost, profit, and consumer assistance
In 2018, average manufacturer costs and profits for essential diabetes drugs, reported at the national level, totaled nearly $204.4 million (Figure 1). Drug production costs accounted for just 29 percent of the total ($58.9 million).
Figure 1. Reported profits and production and administrative costs for essential diabetes drugs (Nevada)
Source: S. Jones, et al. (2019), Tables 4 and 5.
Manufacturers’ administrative expenditures, which may include executive compensation, accounting and legal fees, marketing, advertising, and other administrative expenses as each manufacturer deems reasonable, accounted for $65.5 million. This amount exceeded their reported average production costs (although the Nevada report indicates multiple drug manufacturers reported $0 for total administrative expenditures, and likely included all their costs for manufacturing the drug in the drug production costs).
Manufacturers reported average profits (nearly $52.0 million) — equal to 25.4 percent of the sum of production cost, administrative cost, consumer assistance, and profit — or 41.8 percent of total production and administrative cost. That is, aggregated across reporting manufacturers, manufacturers of essential diabetes drugs earned $42 in profits for every $100 they spent on production and administrative cost.
Nationally, financial assistance to consumers accounted for an estimated 13.6 percent ($27.9 million) of manufacturers’ estimated average total revenues after rebates for essential diabetes drugs. This financial assistance included patient prescription programs, coupons, or copayment assistance programs. However, more than half of the reporting manufacturers indicated that they provided no financial assistance through patient prescription assistance programs (58 percent), and also provided no rebates to PBMs or pharmacies (55 percent). By inference, the average dollar amount of financial assistance among manufacturers that provided any financial assistance (presumably the larger manufacturers) was more than twice the average across all manufacturers (including those that provided none).
- PBM negotiated and retained rebates
PBMs reported negotiating more than $1.9 billion in rebates for essential diabetes drugs for Nevadans (Table 4). Nearly this entire amount was negotiated on behalf of private third parties—predominantly private insurers and self-insured employer plans ($1.3 billion) or other nongovernmental third parties ($598 million). PBMs reported retaining 6.6 percent of all rebates that they negotiated, whether on behalf of private third parties or Medicaid.
Differences in how Nevada’s public report summarized the data obtained from manufacturers and PBMs make it impossible to develop a picture of the supply chain from the information offered—although it seems likely that Nevada has the information necessary to do this. Nevada’s report demonstrates the crucial importance of requiring manufacturers and PBMs to report information at the same level of aggregation—at the state level or nationally (but not either/or), and for the same individual drugs or narrowly specified groups of drugs—in order to build a coherent picture of the factors that contribute to high consumer cost.
This report summarizes information that five states—California, Maine, Nevada, Oregon, and Vermont—have obtained from insurers, manufacturers, and/or PBMs to achieve greater drug price transparency. Each of these states is in a relatively early stage of obtaining and understanding their data. Nevertheless, the information they have made public suggests some early lessons for states interested in obtaining meaningful reporting for drug price transparency.
- States share concerns regarding the affordability of many of the same drugs. We identified 120 drugs that concern at least two of the five states—due to high cost, fast-rising cost, and/or the frequency with which the drug is prescribed. The large number of drugs that are of concern across states indicates that there might be substantial value in sharing information across states. State efforts such as Maryland’s recently enacted Drug Affordability Review Board might initially focus on many of these same drugs. States that are developing statutory authority to require manufacturer reporting for these drugs might consider explicitly authorizing data sharing with other states that have compatible confidentiality protections—or else explore other options available in current law or regulation to reduce manufacturers’ burden of redundant reporting to multiple states.
- There is substantial value in understanding pricing across the entire supply chain, from the manufacturer to the consumer, for drugs that drive increases in health insurance premiums and consumer costs. States that design reporting templates using consistent and compatible concepts and measures, and report those measures publicly, can foster mutual understanding of facts among policymakers and stakeholders in a complex system. However, if rebates and other information are reported collectively for all drugs, it frustrates the ability of policymakers to understand impacts on costs for specific drugs. PBM reporting by manufacturer/product code (if not by NDC) is critical to understanding the supply chain for the specific drugs of interest to the states. Nevada’s PBM reporting requirement — for a list of specified NDCs—demonstrates that PBMs are able to report on specific drugs, not only on their aggregate business.
- When requiring manufacturers, PBMs, or other entities to report drug price data, it is critical that the responsible agency be given the authority and resources necessary to follow up when reported data are not complete or credible. Especially in the first years of implementation, the reporting entities may be learning how to report, and they may be reluctant to invest in getting the data right. Accurate reporting is essential for drug transparency laws to help states develop a fair approach to ensuring that prescription drugs are affordable.
References and Appendix
Arkansas SB 520/Act No. 994, 2019. Available at: http://www.arkleg.state.ar.us/assembly/2019/2019R/Acts/Act994.pdf. Accessed August 1, 2019.
California Department of Managed Health Care. “Prescription Drug Cost Transparency Report (SB 17): Measurement Year 2017.” Sacramento, CA: Department of Managed Health Care, December 2018. Available at https://www.dmhc.ca.gov/Portals/0/Docs/DO/sb17.pdf. Accessed July 31, 2019.
California Office of Statewide Health Planning and Development. “Cost Transparency: Prescription Drugs (CTRx),” 2019. Available at https://oshpd.ca.gov/data-and-reports/cost-transparency/rx/. Accessed July 31, 2019.
State of Connecticut, Substitute House Bill No. 5384/Public Act No. 18-41. Available at https://www.cga.ct.gov/2018/ACT/pa/pdf/2018PA-00041-R00HB-05384-PA.pdf. Accessed July 31, 2019.
Iowa SF 563, 2019. Available at: https://www.legis.iowa.gov/legislation/BillBook?ga= 88&ba=SF percent20563. Accessed August 1, 2019.
Louisiana SB 283/Act No. 371, 2018. Available at: https://legiscan.com/LA/text/SB283/id/1799999/Louisiana-2018-SB283-Chaptered.pdf. Accessed August 1, 2019.
Maine Health Data Organization. “MHDO Prescription Drug Reports,” June 2018. Available at https://mhdo.maine.gov/tableau/prescriptionReports.cshtml. Accessed July 31, 2019.
Minnesota SF 278, 2019. Available at: https://www.revisor.mn.gov/bills/bill.php?b=senate&f=SF0278&ssn=0&y=2019. Accessed August 1, 2019.
Nevada Department of Health and Human Services, SB539 Reporting Timeline v08.10.2018, August 10, 2018a. Available at: http://dhhs.nv.gov/uploadedFiles/dhhsnvgov/content/HCPWD/SB539 percent20Drug percent20Transparency percent20Reporting percent20Timeline_v08.10.2018_website.pdf. Accessed July 31, 2019.
Nevada Department of Health and Human Services. “Essential Diabetes Drugs Price Increase Report.” Carson City, NV: Division of Public and Behavioral Health, Primary Care Office. September 2018. Available at http://dhhs.nv.gov/uploadedFiles/dhhsnvgov/content/HCPWD/09.11.2018 percent20Nevada percent20Essential percent20Diabetes percent20Drugs percent20Price percent20Increase percent20Report_Final.pdf. Accessed July 31. 2019.
Jones, S., P. Thompson, J. Tucker, H. Mitchell, T. McKnight, H. Wallace, and K. Devine. “Drug Transparency Report 2019 Essential Diabetes Drugs” Carson City, NV: Nevada Department of Health and Human Services, Division of Public and Behavioral Health, May 2019. Available at http://dhhs.nv.gov/uploadedFiles/dhhsnvgov/content/HCPWD/DHHS percent202019 percent20Drug percent20Transparency percent20Report percent205-31-2019(1).pdf. Accessed July 31, 2019.
Oregon Department of Consumer and Business Services. “Insurer Reports on Prescription Drugs Drug Price Transparency Program,” 2019. Available at https://dfr.oregon.gov/drugtransparency/data/Documents/insurer-reports-rx-drugs-2019.pdf. Accessed October 16, 2019.
Texas HB 2536, 86th Legislature, 2019-2020. Available at: https://legiscan.com/TX/text/HB2536/id/2027782/Texas-2019-HB2536-Enrolled.html. Accessed July 31, 2019.
Office of the Vermont Attorney General. “Prescription Drug Cost Transparency-Manufacturer and Health Insurer Annual Reporting” (undated). https://ago.vermont.gov/drug-price-transparency-manufacturer-and-health-insurer-annual-reporting/. Accessed July 31, 2019.
State of Vermont Green Mountain Care Board. “Impact of Prescription Drug Costs on Health Insurance Premiums.” Montpelier, VT: State of Vermont Green Mountain Care Board, January 2019. Available at https://legislature.vermont.gov/assets/Legislative-Reports/Act-193-Report-Impact-of-Prescription-Drug-Costs-on-Health-Insurance-Premiums.pdf. Accessed July 31, 2019.
Washington HB 1224/Chapter 334, 2019. Available at: http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/House percent20Passed percent20Legislature/1224-S2.PL.pdf
Appendix 1: Drugs reported by two or more states: California, Maine, Nevada, Oregon, and Vermont
|00173069600||Advair (Diskus)||CA, ME||Respiratory Tract Agents|
|Multiple NDCs||Amlodipine Besylate||CA, OR||Antihypertensives|
|Multiple NDCs||Amoxicillin||CA, OR||Antibacterials|
|60505258009||Atorvastatin||CA, ME, OR, VT,||Antihyperlipidemics|
|60505257909||Atorvastatin||CA, OR, VT,||Antihyperlipidemics|
|50111078751||Azithromycin||CA, ME, OR||Antibacterials|
|00002771559||Basaglar (Kwikpen)||ME, NV, OR||Hormones and Synthetic Substitutes|
|00173085910||Breo Ellipta||CA, ME||Respiratory Tract Agents|
|45963014205||Bupropion Hcl||CA, OR, VT,||Antidepressants|
|10370010150||Bupropion Hcl||CA, OR, VT,||Antidepressants|
|00069046903||Chantix||CA, VT||Antidotes, Deterrents, and Toxicological Agents|
|00069047103||Chantix||CA, VT||Antidotes, Deterrents, and Toxicological Agents|
|68546032512||Copaxone||CA, ME, OR, VT,||Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)|
|Cosentyx||CA, ME, OR, VT,||Immunological Agents|
|61958200201||Descovy||CA, ME, VT||Antivirals|
|00024591401||Dupixent||ME, OR||Immunological Agents|
|00003089421||Eliquis||CA, ME, OR||Blood Formation, Coagulation, and Thrombosis Agents|
|58406044504||Enbrel||CA, ,ME, ,OR, VT||Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)|
|61958220101||Epclusa||CA, ME, OR, VT,||Antivirals|
|Multiple NDCs||Fluoxetine||CA, OR||Antidepressants|
|00054327099||Fluticasone Prop||CA, ME, VT||Respiratory Tract Agents|
|60505082901||Fluticasone Prop||CA, VT||Respiratory Tract Agents|
|69097081412||Gabapentin||CA, ME, OR, VT,||Anticonvulsants|
|00078060715||Gilenya||CA, VT||Immunological Agents|
|68084011201||Glipizide ER||CA, NV||Blood Glucose Regulators|
|68084029521||Glipizide ER||CA, NV||Blood Glucose Regulators|
|68084011101||Glipizide ER||CA, NV||Blood Glucose Regulators|
|61958180101||Harvoni||CA, ME, VT||Anti-infective Agents|
|00002879959||Humalog (Kwikpen)||ME, NV, OR||Hormones and Synthetic Substitutes|
|00002751001||Humalog||CA, ME, OR||Hormones and Synthetic Substitutes|
|00074433902||Humira (Pen)||CA, ME, OR, VT,||Gastrointestinal Drugs; Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)|
|00074379902||Humira (Syringe)||CA, ME, OR, VT,||Gastrointestinal Drugs; Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)|
|00002880559||Humulin N||CA, NV||Blood Glucose Regulators|
|00002831501||Humulin N||CA, NV||Blood Glucose Regulators|
|00002831517||Humulin N||CA, NV||Blood Glucose Regulators|
|00002821501||Humulin R||CA, NV||Blood Glucose Regulators|
|00002821517||Humulin R||CA, NV||Blood Glucose Regulators|
|00002882427||Humulin R U-500 KwikPen||CA, NV||Blood Glucose Regulators|
|00002850101||Humulin R U-500||CA, NV||Blood Glucose Regulators|
|16729018317||Hydrochlorothiazide||CA, ME, OR, VT,||Diuretics|
|00406012301||Hydrocodone/Acetaminophen||ME, OR, VT,||Analgesics – Opioid|
|50458014030||Invokana||CA, NV||Blood Glucose Regulators|
|50458014090||Invokana||CA, NV||Blood Glucose Regulators|
|50458014130||Invokana||CA, NV||Blood Glucose Regulators|
|50458014190||Invokana||CA, NV||Blood Glucose Regulators|
|00006057761||Janumet||CA, NV||Blood Glucose Regulators|
|00006057762||Janumet||CA, NV||Blood Glucose Regulators|
|00006057782||Janumet||CA, NV||Blood Glucose Regulators|
|00006057561||Janumet||CA, NV||Blood Glucose Regulators|
|00006057562||Janumet||CA, NV||Blood Glucose Regulators|
|00006057582||Janumet||CA, NV||Blood Glucose Regulators|
|00006027731||Januvia||CA, ME, NV, VT||Blood Glucose Regulators|
|00006011254||Januvia||CA, NV||Blood Glucose Regulators|
|00006027733||Januvia||CA, NV||Blood Glucose Regulators|
|00006027754||Januvia||CA, NV||Blood Glucose Regulators|
|00006027782||Januvia||CA, NV||Blood Glucose Regulators|
|00006022128||Januvia||CA, NV||Blood Glucose Regulators|
|00006022131||Januvia||CA, NV||Blood Glucose Regulators|
|00006022154||Januvia||CA, NV||Blood Glucose Regulators|
|00006011228||Januvia||CA, NV||Blood Glucose Regulators|
|00006011231||Januvia||CA, NV||Blood Glucose Regulators|
|00006027702||Januvia||CA, NV||Blood Glucose Regulators|
|00006027728||Januvia||CA, NV||Blood Glucose Regulators|
|00597015230||Jardiance||CA, NV||Blood Glucose Regulators|
|00597015237||Jardiance||CA, NV||Blood Glucose Regulators|
|00597015290||Jardiance||CA, NV||Blood Glucose Regulators|
|00597015330||Jardiance||CA, NV||Blood Glucose Regulators|
|00597015337||Jardiance||CA, NV||Blood Glucose Regulators|
|00597015390||Jardiance||CA, NV||Blood Glucose Regulators|
|00088222033||Lantus||ME, NV||Hormones and Synthetic Substitutes|
|00088221905||Lantus Solostar||CA, ME, NV, VT||Hormones and Synthetic Substitutes|
|00169643810||Levemir||ME, NV||Hormones and Synthetic Substitutes|
|00378180310||Levothyroxine Sodium||,CA, OR, VT||Hormonal Agents – Thyroid|
|00185060501||Lisinopril||CA, ,OR, VT||Antihypertensives|
|68180098103||Lisinopril||CA, ME, OR||Antihypertensives|
|65862020390||Losartan Potassium||CA, ,OR, VT||Antihypertensives|
|00071101668||Lyrica||CA, VT||Neuropathic Pain|
|60687014301||Metformin HCL||CA, NV||Blood Glucose Regulators|
|49483062350||Metformin Hcl Er||CA, VT||Blood Glucose Regulators|
|62037083101||Metoprolol Succinate Er||CA, ,OR, VT||Beta Blockers|
|Multiple NDCs||Montelukast Sodium||CA, OR||Respiratory Tract Agents, Asthma|
|55513019001||Neulasta||OR, VT||Blood products and modifiers (Anti-infective for chemotherapy)|
|00169633910||Novolog||ME, NV, OR, VT,||Hormones and Synthetic Substitutes|
|00052027303||Nuvaring||CA, VT||Contraceptives, Intravaginal, Systemic|
|61958210101||Odefsey||CA, OR||Antivirals (HIV Treatment)|
|55111015810||Omeprazole||ME, ,OR, VT||Gastrointestinal Drugs|
|53885024510||Onetouch Ultra Test Strip||CA, VT||Blood Sugar Diagnostics|
|Non-matching NDCs||Orkambi||ME, VT||Respiratory Agents – Misc.|
|59310057922||Proair||CA, ME, OR, VT,||Beta-Adrenergic Agents|
|00023530105||Restasis (Multidose)||CA, ME||Eye, Ear, Nose, and Throat (EENT) Preparations|
|59572041028||Revlimid||CA, ME, OR||Antineoplastics|
|59572041000||Revlimid||CA, ME, OR||Antineoplastics|
|68180035302||Sertraline||CA, ME, OR, VT,||Antidepressants|
|69097083502||Sertraline||CA, VT, OR||Antidepressants|
|65862001305||Sertraline||CA, VT, OR||Antidepressants|
|Non-matching NDCs||Spiriva (Respimat/Handihaler)||ME, VT||Autonomic Drugs; Respiratory Tract Agents|
|12496120803||Suboxone||ME, VT||Central Nervous System Agents; Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)|
|52268001201||Suprep Bowel Prep Kit||CA, OR||Gastrointestinal Agents (Colonoscopy prep)|
|57894006103||Stelara||CA, ME, OR, VT,||Immunological Agents|
|00186037020||Symbicort||CA, ME, VT||Antiasthmatic And Bronchodilator Agents|
|64406000602||Tecfidera||CA, ME, OR, VT,||Psychotherapeutic And Neurological Agents – Misc.|
|49702022813||Tivicay||CA, VT||Antivirals, Hiv-Spec, Non-Peptidic Protease Inhib|
|00597014030||Tradjenta||CA, NV||Blood Glucose Regulators|
|00597014061||Tradjenta||CA, NV||Blood Glucose Regulators|
|00597014090||Tradjenta||CA, NV||Blood Glucose Regulators|
|50111043301||Trazodone||ME, OR, VT,||Antidepressants|
|00169255013||Tresiba (Flextouch)||ME, NV||Hormones and Synthetic Substitutes|
|49702023113||Triumeq||CA, OR, VT,||Antivirals|
|Non-matching NDCs||Trulicity||ME, NV||Hormones and Synthetic Substitutes|
|61958070101||Truvada||CA, OR||HIV Treatment|
|61958070301||Truvada||CA, OR||HIV Treatment|
|00173068220||Ventolin||CA, ME, OR, VT,||Autonomic Drugs; Respiratory Tract Agents|
|00169406013||Victoza (3-Pak)||ME, NV, VT||Hormones and Synthetic Substitutes|
|50458057930||Xarelto||CA, ME, VT||Anticoagulants,Coumarin Type|
|54092060601||Xiidra||CA, VT||Opthalmic Agents|
|Non-matching NDCs||Metformin||CA, NV, OR, VT,||Blood Glucose Regulators|
Source: Mathematica analysis of data reported in: California Department of Managed Health Care (2018); Maine Health Data Organization (2018); Nevada Department of Health and Human Services (2018b); Oregon Department of Consumer and Business Services (2019); and State of Vermont Green Mountain Care Board (2019).
 These states are California, Connecticut, Maine, New Hampshire, Nevada, Oregon, Washington, Texas, and Vermont. See: National Academy for State Health Policy Center for State Rx Pricing, Newly Enacted Laws at https://nashp.org/new-laws/, accessed August 8, 2019.
 See: California Office of Statewide Health Planning and Development (2018), Nevada Department of Health and Human Services (2018b), Maine Health Data Organization (2018), and State of Vermont Green Mountain Care Board (2019).
 See: California Department of Managed Health Care (December 2019).
 See: Vermont Green Mountain Care Board (January 2019).
 See: Oregon Department of Consumer and Business Services (2019).
 Washington defines a covered drug as one that “is currently on the market, is manufactured by a covered manufacturer, and has a wholesale acquisition cost of more than one hundred dollars for a course of treatment lasting less than one month or a thirty-day supply, and … the manufacturer increases the wholesale acquisition cost at least …  percent, including the proposed increase and the cumulative increase over one calendar year prior to the date of the proposed increase [or]  percent, including the proposed increase and the cumulative increase over three calendar years prior to the date of the proposed increase.” See: Washington HB 1224/Chapter 334 (2019), Section 2.
 A number of other states recently passed (but have not yet enacted) legislation that would require PBM reporting. Such states include Arkansas, Iowa, Louisiana, and Minnesota. These states variously would require PBM reporting of total rebates (all states); rebates retained by the PBM (Minnesota—like Nevada, Texas, and Washington); rebates the PBM did (or did not) pass through to insurers (Arkansas, Iowa, Louisiana, and Minnesota—like Connecticut and Texas); rebates passed through to enrollees at point of sale (Arkansas—like Texas); the amount paid for pharmacy services (Arkansas—like Washington); administrative fees received by the PBM (Iowa and Louisiana); and the highest, lowest, and mean aggregate retained rebate percentage (Iowa, Louisiana, and Minnesota). See: Arkansas SB 520/Act No. 994 (2019); Iowa SF 563 (2019), Louisiana SB 283/Act No. 371 (2018); and Minnesota SF 278/Session Law Chapter 39 (2019).
 Nevada’s report notes that the variation among manufacturers (and potentially among drugs produced by the same manufacturer) is significant: a simple unweighted average per manufacturer, then calculated across manufacturers, produced an average profit of 152 percent of the sum of production and administrative cost—that is, for every dollar spent on combined production and administrative costs, the manufacturers earned, on average, $1.52 in profit. The report states that larger manufacturers (with lower profit rates) tend to reduce the aggregate profit ratio, as calculated in Figure 1.
 Built on the National Academy for State Health Policy’s model legislation, Maryland’s Prescription Drug Affordability Board is an independent body with the authority to review high-cost prescription drugs and identify fair, appropriate rates for Marylanders to pay.
 To obtain consistent information from all reporting entities, NASHP’s model legislation and reporting templates call for reporting at the NDC level, and they align national and state-level reporting to support a coherent picture of pricing along the supply chain for each drug. See: https://nashp.org/policy/prescription-drug-pricing/model-legislation/#toggle-id-1, accessed August 9, 2019.
Acknowledgements: The National Academy for State Healthy Policy’s Center for State Rx Drug Pricing, with support from Arnold Ventures, commissioned this analysis from experts affiliated with Mathematica Policy Research.
As state officials investigate reducing costs by leveraging their collective buying power to purchase prescription drugs, the National Academy for State Health Policy (NASHP) has developed a Checklist for Coordinating Public Purchasing of Prescription Drugs to help states establish baseline data across public purchasers and identify effective strategies to coordinate purchasing.
The checklist is designed to help states gather data on purchasers’ contract terms with pharmacy benefit managers (PBMs), how much is spent on drugs based on net cost and utilization, and plan benefit design.
Following California’s leading effort to implement bulk purchasing across state agencies, New Mexico, Delaware, and Minnesota have established interagency work groups of public purchasers, including those representing state government, state university, and public school employees and retirees as well as departments of corrections, state hospitals, and Medicaid programs.
These groups’ early meetings have focused on understanding current drug spending and plan design across purchasers. To help guide this work, NASHP’s checklist captures important information about these plans’ contracts with PBMs, including contract expiration dates and the inclusion of transparency provisions that:
- Prohibit spread pricing – when a PBM pays a pharmacy a lower rate than the rate the PBM claims for reimbursement from the health plan; or
- Require rebates to be passed through to the plan.
Once this data is established, interagency groups can identify cost and contract variations and explore various opportunities, including aligning PBM contracts across payers, which creates the potential to pool prescription drug purchasing to achieve savings.
NASHP’s checklist also asks purchasers to identify the 10 drugs with the highest net cost to health plans and the 10 most frequently prescribed drugs. Understanding the highest cost and highest use drugs across purchasers can guide the work of interagency groups, allowing them to prioritize efforts around specific drugs.
Interagency purchasing groups in New Mexico and Delaware have identified high-cost specialty drugs, such as Humira, as a major cost driver and a growing area of concern for public purchasers. Armed with this data, states working to leverage their purchasing power may be better positioned to respond to future drug spikes and the high cost of specialty drugs.
NASHP continues to develop model policies to help states address drug costs. See its latest proposal for a state purchasing pool for prescription drugs, which would allow individuals and businesses to join a public drug plan, increase the size of the state purchasing pools, and secure lower costs. Learn more about Delaware and New Mexico’s leveraging efforts in these NASHP blogs.
Despite the health benefits of immunizing pregnant women against influenza and pertussis (whooping cough) and protecting them and their infants from these life-threatening diseases, only half of pregnant women are vaccinated against both diseases and only one-third receive both the influenza and pertussis vaccines during pregnancy.
Three states are trying a number of innovative approaches to increase vaccination rates among pregnant women by providing incentives to health plans, increasing access to vaccinations through pharmacies, and using data to identify and target populations, regions, and providers with substandard influenza and Tdap (which protects against pertussis) vaccination rates.
Evidence shows pregnant women are at increased risk of developing complications from certain preventable diseases and can also risk passing those diseases on to their children. Following immunization, data shows that both mothers and infants are less likely to be hospitalized from complications. When a woman is vaccinated during pregnancy, she develops antibodies that are transmitted to her child before birth, which can then protect the infant during the first few months after birth. The US Centers for Disease Control and Prevention (CDC) recommends that women who are pregnant or planning to become pregnant get the flu vaccine and the Tdap vaccine during each pregnancy.
Low Immunization Rates Persist
Despite the CDC’s guidelines, many women do not receive the influenza and pertussis vaccines during pregnancy. According to the CDC’s recent report, Vital Signs: Burden and Prevention of Influenza and Pertussis Among Pregnant Women and Infants — United States, published in Morbidity and Mortality Weekly Report (MMWR), current rates of maternal immunization for influenza and Tdap are 53.7 percent and 54.9 percent, respectively. Only one-third of pregnant women received both the influenza and Tdap vaccines, and the rates are even lower for African-American pregnant women. The report noted that provider recommendations to patients can improve maternal immunization rates – when providers offered vaccinations or provided a referral to pregnant women, 65.7 and 70.5 percent received the flu and Tdap vaccine, respectively. Based on this data, the CDC recommends that providers begin discussing vaccinations with pregnant patients early and continue the conversation during each visit.
Overall, women enrolled in public insurance programs were less likely to be vaccinated during pregnancy than women with private insurance, due in part to access barriers. State Medicaid agencies, which cover 43 percent of all births across the United States and up to 60 percent of births in some states, can use innovative approaches to identify pregnant women in need of vaccinations, gather data to identify strategies and targeted approaches, and encourage providers to increase vaccination rates to improve health and save on costs.
The 2019 MMWR data are especially notable in light of the Healthy People 2020 goal to increase the number of pregnant women vaccinated against influenza to 80 percent. While most states remain far from that goal, California, Colorado, and Wisconsin are working to improve maternal vaccination rates for both their Medicaid populations and privately insured women.
California’s Medi-Cal Strategies
In California, pregnant women covered by Medi-Cal, the state’s Medicaid plan, see providers who are less likely to stock or recommend the Tdap vaccine. Women on Medi-Cal receive prenatal Tdap immunizations at much lower rates than privately insured women, and infants born to mothers with Medi-Cal coverage are twice as likely to contract pertussis compared to privately insured infants. California is using a number of strategies to improve maternal immunization rates for women on Medi-Cal, including setting expectations for contracted health plans, monitoring and providing incentives, and addressing barriers at the clinician and patient level:
- Medi-Cal managed care contracts require health plans to ensure the timely provision of all Advisory Committee on Immunization Practices (ACIP)-recommended immunizations for members, and report data to the California Immunization Registry (CAIR). Medi-Cal managed care contracts also require that contracted health plans monitor their primary care provider sites for the provision of preventive services, including all ACIP-recommended immunizations for adults and children.
- California’s 2019-2020 budget includes funding for incentive payments in the managed care delivery system for timely prenatal care as well as for prenatal providers who administer the Tdap vaccine to pregnant members. Some of California’s Medi-Cal managed care health plans are also trying to lower the financial barriers to providing vaccines by allowing providers to directly bill the health plan outside of capitation rates, providing free Tdap starter doses to clinics, and encouraging group purchasing of vaccines.
- Medi-Cal encourages its health plans to follow up on potential quality of care issues when cases of pertussis in infants born to unvaccinated mothers are identified through public health department notification.
- California pharmacists are authorized to provide immunizations without a physician’s order. Most major chain pharmacies in California offer Tdap immunizations as part of their vaccine portfolio. All routinely recommended adult vaccines are covered by Medicaid without prior authorization (in both fee-for-service and managed care plans) when given in a provider’s office or in a pharmacy. Recent state regulations require pharmacists to notify providers of immunizations administered and to enter all doses into the California Immunization Registry, making it possible for providers to know whether vaccine referrals to pharmacies are successful.
Colorado and Wisconsin’s Use of Data
One of the challenges to improving maternal immunization rates is obtaining and monitoring data, especially as many states do not require providers to report immunizations to their Immunization Information Systems (IIS). Quality data, though, is needed by states working to tailor their strategies for improving immunization uptake to the areas of highest need and to monitor trends. Specifically, the Centers for Medicare & Medicaid Services identifies data linking of Medicaid eligibity and claims data with vital statistics data as a critical mechanism for surveillance, programmatic monitoring, and evaluation of maternal immunization.
- Colorado is using data matching to determine the rates of maternal immunization in each county. Colorado has successfully matched 96 percent of patient medical record numbers with Colorado Immunization Information System (CIIS) records. The CIIS data matching has allowed the state to map immunization rates by provider and region and identify gaps in maternal immunization uptake. Colorado is now using this data to determine the areas of highest need in the state to inform and guide outreach programs. Currently, Colorado is also piloting text and email reminders to encourage patients to get vaccinated.
- Wisconsin is also using data matching to obtain baseline immunization rates. Wisconsin matched 96 percent of women who gave birth in 2018, as recorded by the Vital Records Office, with data from the Wisconsin Immunization Registry. Like Colorado, Wisconsin used this data to create data maps to identify influenza and Tdap vaccination levels in each region of the state. Wisconsin was also able to track vaccination rates by age, race, type of insurance, and quality of prenatal care. Next steps for the state include monitoring these trends, identifying areas of highest need, and using the data to improve maternal immunization rates.
In addition to partnering with state public health departments and their immunization programs, state Medicaid agencies can partner with providers to ensure vaccines are stocked and to promote vaccine recommendations for pregnant women so they become routine. For example, the American College of Obstetricians and Gynecologists has released a number of resources designed to support health care providers in increasing maternal vaccination rates, including the Maternal Immunization Tool Kit, strategies for immunization implementation, and a guide to starting an office-based immunization program. The American Academy of Pediatrics also offers recommendations on cost-saving measures for the purchase and administration of immunizations. Finally, the CDC has compiled a toolkit for prenatal care providers that includes resources for provider and patient vaccination education.
In addition to these resources, other states can learn from the work California, Colorado, and Wisconsin have done to identify gaps and improve vaccination rates among pregnant women covered by state Medicaid programs.
The National Academy for State Health Policy (NASHP) would like to thank Abby Klemp at the Wisconsin Department of Health Services, Sarah Royce at the California Department of Public Health, and Karen Mark at the California Department of Health Care Services for their time and insight. NASHP would also like to thank the US Centers for Disease Control and Prevention for their assistance with this blog and for funding this project.
Last week, California enacted the first-in-the-nation state law to combat pay-for-delay deals between brand-name and generic pharmaceutical drug manufacturers. In a pay-for-delay deal, a brand manufacturer pays a generic competitor to settle patent litigation and keep the lower-cost version of the drug off the market. Delaying market entry of generic drugs limits competition and can keep prices for brand-name drugs high.
The Federal Trade Commission estimates these deals cost consumers $3.5 billion in higher drug costs each year.
Under California’s new law, pay-for-delay agreements are presumed to have anticompetitive effects – unless a company can prove otherwise – if a generic manufacturer receives anything of value from a brand-name drug manufacturer that has sued for patent infringement. The law opens these agreements to civil litigation from California’s Attorney General, who can recover up to $20 million or three-times the value given to parties in the agreement, whichever is greater.
This isn’t the first action California has taken to push back against anticompetitive practices by pharmaceutical manufacturers. Earlier this year, the state reached a $70 million settlement with two manufacturers that allegedly entered into pay-for-delay agreements to delay market entry of cheaper generic drugs. Although a 2013 US Supreme Court case found that pay-for-delay settlements could violate antitrust laws, California’s presumption that these types of deals are anticompetitive gives the Attorney General a stronger platform to investigate and prosecute drug makers who enter into these agreements.
To explore all state legislation across the country to curb prescription drug costs, explore the National Academy for State Health Policy’s Legislative Tracker.