Numerous State Laws and Pending Bills Intended to Address Rising Drug Prices

While the federal government continues to debate various policies for lowering prescription drug prices, many states have already enacted laws to do just that. According to a report by the National Academy of State Health Policy, 33 states have enacted 51 laws through early September 2019 that address drug pricing, affordability and access. In addition, dozens of other bills are still pending, and could be acted on later this year.

The drug pricing legislation generally relates to the following areas:

Pharmacy Benefit Manager (“PBM”): By far the biggest category, there are numerous pending bills and new laws directed to regulating PBMs. They include various provisions, including for example, prohibiting PBMs from restricting pharmacists from disclosing information to patients about lower cost drug alternatives, requiring the reporting of rebate information, and imposing licensing requirements on PBMs.

Importation: There are new laws and pending bills directed to establishing state programs to import lesser expensive prescription drugs from Canada. In addition, Missouri has a bill pending in the legislature that would prohibit any “state official or law enforcement officer from impeding or inhibiting the importation of a prescription drug for personal use.

Study: There are new laws and pending bills directed to initiating studies on various drug pricing topics, including pharmacy reimbursement practices, drug price transparency, regulating PBMs, and the impact of rebates and other remuneration on drug pricing.

Transparency: There are numerous transparency laws and pending bills directed to issues such as requiring manufacturers to provide the Wholesale Acquisition Cost (“WAC”) of a drug, requiring notification of drug price spikes, and requiring pharmacy benefit managers to provide data on rebates from drug manufacturers. Several bills relate specifically to drugs used to treat enumerated diseases, such as diabetes and asthma.

Volume Purchasing: There are new laws and pending bills directed to studying how to leverage bulk purchasing power.

Affordability: There are new laws and pending bills directed to establishing prescription drug affordability review committees, and review boards to investigate price spikes. In addition, Massachusetts has a pending bill that, if enacted, would require PBMs to obtain a license and would require them to have a fiduciary duty to health benefit plan clients.

Price Gouging: There is one pending bill in Indiana that would prohibit a manufacturer from engaging in price gouging in conjunction with the sale of essential generic or off-patent drugs. The bill authorizes the attorney general to bring an action against a manufacturer for such price gouging. There is a similar price gouging bill pending in New Jersey.

Other: This category includes various provisions in both pending bills and enacted laws, directed to for example, anticompetitive effects of patent litigation settlements, allowing pharmacists to make biological product substitutions, placing monthly caps on cost sharing for prescription insulin dugs, imposing drug advertising requirements, and limiting consumer cost-sharing for specialty prescription drugs.

Coupons: There are several pending bills that would prohibit drug manufacturers from offering coupons or discounts to cover insurance co-payments, if a lower cost generic is covered under the individual’s health insurance plan. Arizona, West Virginia and Virginia have recently enacted laws requiring that, when calculating an insured individual’s contribution to any applicable cost-sharing requirement, an insurer must include any cost-sharing amount paid by the enrollee or another person on behalf of the enrollee. This means that the amount paid for prescription drugs by drug manufacturer coupons and copay assistance must count toward satisfying the enrollee’s cost-sharing requirement. Similar bills are pending in Kentucky and West Virginia.

States serve as a bellwether to what national legislation may end up being adopted.  The number of laws relating to drug pricing already enacted in 2019 exceeds the 45 laws enacted in all of 2018. It does not appear that this trend is going to abate anytime soon.