States Move to Cut Prescription Drug Costs

State legislatures across the U.S., responding to growing calls for lower pharmaceutical prices, are increasingly passing laws to regulate drug manufacturers. The new laws are, in part, a reaction to the federal government’s failure to rein in drug prices on its own, despite the Trump administration listing cost control and affordability as two of its top priorities.

State lawmakers are attempting to tackle rising drug costs in a variety of ways. In 2018, 24 states passed 37 bills to regulate the pharmaceutical industry. Many of these policies seek to make drug pricing more transparent, forcing manufacturers to explain increased costs to consumers; others are aimed at policing pharmacy benefit managers, which often take payments from drug companies in return for preferential treatment in prescription coverage.

Drug manufacturers are fighting back, charging that the new regulations are unconstitutional expansions of state regulatory power. In California, the Pharmaceutical Research and Manufacturers of America (PhRMA) has filed a lawsuit claiming that the state’s new transparency policies – which require advance notice of price increases and annual reports showing the percentage of premiums attributable to drug costs – violate manufacturers’ First Amendment rights.

Other states have already seen their regulatory powers curtailed by the courts. The Association for Accessible Medicines, a lobbying group for generic drug manufacturers, successfully filed suit to block implementation of a Maryland law that would fine companies for “unconscionable” increases in generic or off-patent drugs.

PhRMA also challenged a Nevada law requiring manufacturers of diabetes treatments to report any relationships between manufacturers and pharmacy benefit managers in the state. That lawsuit was dropped after Nevada agreed that certain information in the reports could be kept confidential.

Source: The New York Times, August 18, 2018.