States Tackle Drug Pricing

For an assortment of reasons, the federal government hasn’t taken any action on regulating drug prices, so a handful of states have taken matters into their own hands. New York, Massachusetts, Maine, Maryland and New Hampshire have established entities with drug pricing powers. Harvard Medical School researchers published an informative overview of the state government efforts in the Milbank Quarterly in August.

As happens when healthcare policy devolves to the states, there’s a lot of variety in how the state-level drug pricing regulation is playing out. The Maine and New Hampshire drug pricing boards advise non-Medicaid, state-financed health plans, but they can’t impose requirements. The Maryland board is also focused on non-Medicaid, state-financed health plans, but it can set upper payment limits on drugs. The Massachusetts board is not a separate board but the Massachusetts Health Policy Commission was set up to find ways to control overall healthcare spending in the state, not just expenditures on drugs. New York has two drug boards, one for the state’s Medicaid program and the other for state-regulated commercial health insurers.

Only the board in New York with authority over the Medicaid program has completed drug-pricing reviews. The Harvard researchers say those reviews have resulted in savings for New York. After the board decided Vertex’s Orkambi (lumacaftor/ivacaftor), a cystic fibrosis drug, was priced too high, the state reached a confidential supplemental rebate agreement with Vertex.

A decision by the board that the state should peg the price for Remicade (infliximab) to the price of an infliximab biosimilar led to another supplemental rebate agreement that benefited the state, according to the Harvard researchers.