Voter anxiety leads to flood of legislation

A look at the 2019 federal and state legislative trends related to drug pricing

July 8, 2019

Public angst over rising drug prices has led to a flood of federal and state legislation this year. Congress is considering more than 50 bills related to drug prices. And in state houses across the country, lawmakers have introduced more than 1,500 bills related to drug prices and pharmacy benefit managers (PBMs). In addition, the Trump Administration has proposed regulatory changes that would eliminate the safe harbor for manufacturer rebates and limit out-of-pocket (OOP) costs under Medicare, among other things.

“Whenever voters are upset, politicians feel the need to do something,” says David Root, vice president of government affairs for Prime.

Why are voters upset?

  • Increased consumer exposure to high drug prices through high-deductible health plans
  • Pharmaceutical Research and Manufacturers of America (PhRMA) lobbying efforts and direct-to-consumer campaigns to deflect blame over rising drug prices
  • Misconceptions about the role of PBMs

“Pharma is painting PBMs as ‘middle men,’ which undermines the value we bring to the system,” Root says. “With $100 million in marketing and lobbying efforts, they can paint with a broad brush.”

Federal trends fall in three areas

On the national level, legislative interest focuses on three issues:

  • Transparency: Shedding light on how drugs are priced, paid for and where the money goes
  • PBM practices: Regulating tools like discounts, rebates and utilization management (UM) to control costs
  • OOP spending: Limiting OPP by placing caps on what consumers pay out of pocket or mandating rebates be passed through to consumers

State trends zero in on PBMs

Virtually every state is debating some type of some type of legislation that will hamper a PBM’s effectiveness at holding down drug costs. Often these laws are based on “template” legislation developed by such organizations as the National Council of Insurance Legislators (NCOIL). Common topics include:

  • PBM transparency on drug prices: More than 30 states have seen proposals around public disclosure of drug price negotiations
  • Utilization management: Every state where Prime’s BLue Plan owners are headquartered is debating legislation to limit tools such as prior authorization and step therapy
  • Licensure/registration: In more than 20 states, lawmakers are debating PBM licensure requirements
  • Mandated maximum allowable cost (MAC) reimbursement levels: At least a dozen states have proposals that would set MAC levels

At the state level, Prime’s positions focus on what’s good for the member

Prime’s positions — particularly at the state level — vary, based upon the impact of a proposed law on the ability of a PBM to effectively manage drug prices for the benefit of plans and, ultimately, members.

“Every proposed bill or regulation is different and requires unique activity,” Root says. For example, Prime doesn’t oppose licensure requirements, provided the requirements stay pure and are reasonable.

Prime’s Government Affairs team works hard to educate lawmakers on ‘good transparency’ v. ‘bad transparency.’

  • Prime supports giving the health plan or employer all the necessary information to meet specific contract terms with a PBM
  • Prime also strongly supports guaranteed audit rights for clients
  • And, through the “My Prime” application a consumer can find out how much a drug will cost, what a member’s specific cost share will be, and which pharmacy offers the drug at the cheapest price

These are all examples of good transparency that Prime currently engages in and supports.

Prime opposes requirements such as disclosing proprietary pricing information or arbitrarily setting MAC levels. These have hidden, negative consequences that may actually drive consumer prices higher.

Prime focuses on collaboration, always

One constant, however, is Prime’s collaborative approach. “Partnering with our Blue Plan owners gives us unity in meetings with legislators and regulators,” Root says. “They see that our partnership model is a unique in the PBM industry as it is already built on transparency with our clients.”

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