In 2018, supplemental rebate agreements negotiated by 46 states, combined with federal rebates, reduced prescription drug spending by more than 35 percent in those states. (Photo: Shutterstock)
For those state policymakers who don't want to wait to see how—or if—Washington will combat skyrocketing prescription drug prices, experts at the Center for American Progress have a few recommendations for states to act now to reduce the price tag within their own drug spending.
"Prescription drug spending has been rising steadily across the United States since the late 1970s," the experts write. "Congress is considering multiple approaches at the federal level to reduce drug spending, but state policymakers can also act independently to address this issue in the interim."
At the top of their list is negotiating supplemental Medicaid rebate agreements. Only four states—Hawaii, New Jersey, New Mexico, and South Dakota—have not negotiated supplemental rebate agreements, to their detriment: In 2018, SRAs negotiated by the other 46 states, combined with federal rebates, reduced prescription drug spending by more than 35 percent in those states.
"If these states decide to pursue SRAs, they should first require drug manufacturers to submit additional and more detailed pricing and clinical information," the experts write. "By requiring detailed information about discounts and rebates, states will have a better understanding of the prices charged for specific products. States can leverage favorable PDL placement to ensure that drug manufacturers provide this information and enter into SRAs."
States should include in an SRA is an inflation adjustor similar to that included in the federal rebate agreement, to offset manufacturer price increases in the future, they recommend. States should also consider enhancing drug utilization reviews. While states are required to perform Medicaid drug utilization reviews for their fee-for-service drug benefit, this same requirement does not exist for physician-administered drugs or managed care drug benefits.
"By expanding and aligning DUR across the Medicaid program, states can help to ensure that these programs are operating as efficiently as possible," the experts write.
States can join pools to coordinate purchasing for their programs. Three existing pools are the National Medicaid Pooling Initiative, the Top Dollar Program and the Sovereign States Drug Consortium.
"Among the three pools, more than half of the country participates in drug purchasing pooling for Medicaid," they write.
Other policy suggestions include:
- Establishing a common formulary across state programs
- Consolidating procurement of pharmacy benefit manager services
- Negotiating rebates with PBMs
- Implementing subscription-based purchasing
- Establishing a prescription drug affordability review board
- Reference pricing drugs
- Maximizing participation in the 340B Drug Pricing Program
- Promoting the use of generics
- Reducing the cost of physician-administered drugs
- Importing drugs from Canada
"Patient outcomes must be a central component of any reforms to reduce prescription drug spending," the experts conclude. "If not implemented carefully, some reforms have the potential to reduce patient access to necessary drugs or promote the prescription of medically inappropriate drugs in the name of reducing costs. Policymakers should carefully examine their states' current legislative framework surrounding prescription drugs and ensure that policies are maximizing state savings."
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Katie Kuehner-Hebert
Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.
