As part of our Shared Multi-State Agenda,
the Progressive States Network is working with legislators, advocates
and leading experts to promote Rx reforms in 2010 that will reduce
health care costs for consumers, businesses, and state and local
governments, and will help ensure access to safe and effective
medications. Through coordinated, strategic support, PSN and our
allies will be working to introduce and advance Rx reforms that will
help address state budget deficits and improve access to quality
medications in as many states possible; providing model legislation,
policy analysis, messaging and more - all of which has been gathered
and will be constantly updated on our Prescription Drug Reform Shared Agenda web page.
As NLARx documents,
pooling the bargaining power of drug purchasers, like state Medicaid and state
employee health plans, increases their individual leverage to negotiate cheaper
prices from the industry.
Pools: At least five
multi-state bulk purchasing pools are currently negotiating lower prices
from drug companies. As NLARx reports,
Maine, and Vermont created the Sovereign
States Drug Consortium, and Oregon and Washington
created the Northwest
Prescription Drug Consortium.
In 2006, it was estimated that Maine would save $5 million in state
and federal Medicaid costs by participating in the purchasing pool. As Prescription Policy Choices reports,
could save $17 million annually by combining the drug purchasing of all
its state programs.
Pharmacy Benefit Managers
(PBMs): PBMs negotiate rebates and manage drug benefit programs on
behalf of public and private health plans and many self-insured
businesses. However, the PBM industry is highly corruptible. To get their drug on a health plan's
benefit list or formulary, drug companies make payments to PBMs that
are proportionate to how often the drug is prescribed. PBMs boost
their profits by pocketing some or all of these payments instead of
passing them along to their customers.
Three PBM companies administer 80% of all private prescription
coverage and pocket annual revenues exceeding $15 billion. Model
legislation compiled by PPC and NLARx requires greater transparency of
negotiations, disclosure of conflicts of interest, and new ethical
standards. PBM laws in Maine
and DC have been upheld
by the federal courts.
Pricing Reforms:Worries about
price gouging and artificial price inflation on celebrity drugs are
driving states to shed light on the pricing practices of pharmaceutical
and Colorado laws prevent unfair and discriminatory pricing
of prescription drugs, particularly during emergency situations. Maine law
requires disclosure of manufacturer prices and "best price," and
West Virginia created the Pharmaceutical Cost
Management Council in 2004 (HB 4084) to continually examine the cost of
prescriptions and develop ways to reduce prices in the state. Model
legislation compiled by NLARx includes the Excessive Drug
Pricing Act and the Drug Retail Price
$287 billion -- that is how much the U.S. spent
on pharmaceuticals in 2007, representing a significant driver of health
care costs. While spending on hospital and physician care surpass
spending on prescriptions, drugs still account for 14% of all health care expenditures. Combine this with polls that show 70% of Americans believe the drug industry puts profits ahead of people, and it's no wonder that in 2008, at least 540 bills
and resolutions are being considered by states across the country to
reduce prescription drug prices, ensure the quality of medications
covered by public and private health plans, and reduce the undue
influence of pharmaceutical industry marketing - which itself tops out
at $30 billion each year.
Incremental steps to improve the health care system can lay the
foundation for comprehensive reform that provides health care for all.
Comprehensive reforms enacted in Massachusetts, Vermont, Maine and San Francisco were, in large part, the result of pragmatic incremental steps those states had already taken. For example, a Families USA report discusses the many reforms Massachusetts put in place over the years that led to its comprehensive 2006 reform. Not every state is as far along in moving comprehensive health care reform, but
each state does have numerous options for increasing access to
coverage, reducing the growth of health care costs, and improving the
quality of care.