Prescription price controls in the works

Drug prices are too high is a familiar refrain sounded by state regulators and lawmakers. But this year, the issue has reached a tipping point. 

Susan Barrett, executive director of the regulatory Green Mountain Care Board summed up the general sentiment: “Somebody has to do something.”

When the state’s two major insurance companies asked for rate hikes of more than 10%, they blamed prescription drug costs, which are determined by private pharmaceutical companies. So did hospitals, when they sought budget increases from regulators last summer. 

In response, lawmakers, advocates and insurance companies are calling for more aggressive tactics to keep costs in check. 

Here are six new proposed statutory requirements in play: 

Insulin price caps (S.296 and H.822)

Under this proposed mandate, Vermonters with diabetes would pay no more than $100 a month for insulin. 

The cost of the drug has skyrocketed nationwide. Many people have been forced to choose between keeping their blood sugar under control and other necessities like food or rent. Between 2012 and 2016, prices rose from about $234 a month to $450 a month, according to the Health Care Cost Institute. 

A Vermont House bill, H.822, would limit the out-of-pocket expense to $100 a month per person. Insurance companies — and ultimately ratepayers — would absorb the difference in cost. The bill also asks the Vermont Attorney General’s Office to investigate insulin prices and determine whether new consumer protection measures should be put in place to help keep down costs. 

The problem? It wouldn’t apply to people without insurance or to those who get their insurance from a self-funded large employer. Mike Fisher, the state’s chief health care advocate with Vermont Legal Aid, says it’s still a worthwhile effort. “This is a place of real grief in the health care system that, quite frankly, kills people,” he said. 

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Vermont wouldn’t be the first state to take on insulin pricing. Last year, Colorado passed a similar measure. 

340B drug program disclosures (S.247 and H.787)

Under the federal 340B program, hospitals can buy prescription drugs at reduced prices, sell them to patients at market rates, and keep the difference. 

Legislation in front of the House Health Care Committee, H.787, would require hospitals to report the money they make through the 340B program and explain how that money was used. It also asks the Agency of Human Services to suggest changes to the state’s policies on the program.

That bill is up in the air, according to Sen. Chris Pearson, P/D-Chittenden, a sponsor of the Senate version. Sharing and limiting hospital revenue from the program makes sense at the University of Vermont Medical Center, he said. But it could undermine the financial stability of a smaller hospital. “There’s a lot at play here,” he said. 

But Pearson says the disclosures make sense. “There’s something really disturbing here that the 340B is supposed to make prescriptions affordable and our hospitals are pocketing the difference,” he said. 

Drug price caps (S.246 and H.785)  

The five-member Green Mountain Care Board which regulates health care in Vermont currently has no control over prescription drug prices. A new proposal, introduced in both the House and the Senate, asks regulators to consider setting limits on drug prices. 

It would be the first step toward enabling the board to cap drug prices, a measure that has been implemented elsewhere. Maryland has a drug affordability board that sets prices. Maine has established a similar model that goes into effect next year.

The Vermont House and Senate bills, H.785 and S.246, direct the board to evaluate the most expensive prescriptions, including drugs that cost more than $100 a month or that have increased more than 200% over the past year. The legislation charges the board with finding ways to reduce costs, including price limits on certain drugs. 

Barrett, the executive director of the Green Mountain Care Board, said the board is willing to study the issue and supports any measure to lower drug costs. She didn’t have details about how the board would oversee the program. 

Evaluating and shedding light on price increases is “good for transparency,” according to Inmaculada Hernandez, a professor of Pharmacy and Therapeutics at the University of Pittsburgh, who has studied drug prices. But, she pointed out, consumer awareness and even the ability to cap prices for a few drugs doesn’t address the factors that cause pharmaceutical companies from raising drug prices in the first place. 

“State legislators have very little leverage over any of that,” Hernandez said. “I really commend states like California, Colorado, Vermont, because they’re starting to come up with things they can do. But they need to be complemented, supported by the federal government.”

Importing drugs from Canada (S.136)

Lawmakers want to take the next steps in the process to buy cheaper prescription drugs from across the border. They voted to create a plan to buy meds from Canada in 2018 — even though it’s prohibited by the federal government. Since then, Vermont has moved forward on the measure: In November, state officials sent a plan to import the drugs to the feds. The state will submit a formal application by July.

Now, legislators want to take the next incremental step: the bill, S.136, would allow the state Board of Pharmacy to offer licenses for Canadian companies to participate in the drug importation program. The bill was introduced last year and died in committee. If it’s approved, the Board of Pharmacy would create two new prescription drug wholesaler licenses. It also authorizes the Agency of Human Services to implement the importation program. 

Hernandez, the professor of pharmacy, said she commends the efforts of any state to do what it can. But, she pointed out, importing drugs from Canada will only decrease prices for a short period of time. After a while, demand from Americans will increase, and Canadians will see higher prices and drug shortages. The Trump administration took steps to begin allowing drug importation from Canada in December, and several other states are, like Vermont, moving toward importing prescription medications.

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“It’s an easy fix for a few months, for a few patients, but it certainly won’t address the underlying issue,” Hernandez said. “It’s a temporary solution.”

Another insulin cost-saver

Fisher, the state’s health care advocate, is asking lawmakers to consider a combination of the insulin bill and the 340B measure. He’s proposing that hospitals be required to sell insulin to patients at 150% of the 340B price they purchase it for, plus a dispensing fee for the pharmacist. 

Fisher said he’s heard anecdotal evidence that hospitals buy insulin at $15 and then sell it at the commercial market price of $300.

His proposal would only apply to hospitals, not to private physicians, who don’t qualify for 340B. 

Fisher purposely took a “very narrow, insulin-only” approach on the proposal. “I understand that 304B revenue is very important for hospitals. I want to be really careful not to undermine hospitals’ sustainability,” he said. 

Fisher said he didn’t know whether a lawmaker would agree to sponsor the bill, but said he would continue to raise it in his testimony to committees.

BlueCross BlueShield of Vermont buys generic drugs

BlueCross BlueShield of Vermont has also taken matters into its own hands. Last month, the state’s largest insurance company announced that it had partnered with the nonprofit Civica Rx to buy generic medication.

Civica Rx manufactures generic drugs that are no longer under patent and then sells them at lower prices, according to Sara Teachout, spokesperson for BlueCross BlueShield. It uses vacant manufacturing space to save money and sell the medication at lower prices, she said.

BCBS of Vermont is one of 18 BlueCross companies nationwide that are participating in the partnership. The cheaper drugs will be available to Vermonters in a year and a half, according to Teachout.

“We’re trying to evaluate what would help the most people in the least amount of time,” she said. Most of the measures introduced by the Legislature won’t ultimately lower drug prices, she said. The Civica Rx partnership, however, “will actually work.”