States Jump on the Prescription Drug Price-Control Bandwagon

What happens in Washington doesn’t stay in Washington, especially when it’s really bad public policy.

Democrats were able to use last year’s Inflation Reduction Act (IRA) to pass one of their top policy dreams: prescription drug price controls, er, “negotiations.”

The Centers for Medicare and Medicaid Services (CMS) is beginning to crank up the process. Politico reports that Medicare Director Meena Seshamani is preparing to “name the first drugs subject to negotiation in a few months.”

Oh, and the report adds, “The federal government wants patients to have a role in the first round of Medicare drug price negotiations set to start this fall.”

Um, I guess because the feds think patients have so much knowledge about how prescription drugs are developed, tested and ultimately priced?

But that’s only the beginning. Axios explains that several blue states are now saying, If Washington can impose price controls on drugs, why can’t we?

“Colorado, among the states to create a state prescription drug affordability board [PDAB], is rolling out a dashboard this week that will show which drugs are the likeliest to have price caps,” according to Axios.

The IRA only imposes price controls on drugs used by Medicare beneficiaries—not because Democrats wanted to stop there, but because that’s as much as they could get and still pass the IRA.

But blue states aren’t limited by the IRA. So they “are considering capped co-pays, reference pricing and so-called “Netflix-model” subscription arrangements to cut the costs of prescription drugs.”

So far, the states of Maryland, Colorado and Washington have boards with the power to try to implement some type of price controls, according to National Public Radio.

Apparently, Maine, New Hampshire, Ohio, and Oregon also have boards, but they don’t have the power to make significant changes in the prescription drug market.

But if other sectors of the health care system are wiping their foreheads thinking they may have dodged the price-control bullet, they may be premature.

Prescription drugs may be the first target, but it’s all “part of a broader landscape of efforts by states to get health care costs under control, including hospital pricing and site-neutral payments,” says Axios.

There will be legal challenges to states that jump on the prescription drug price-control bandwagon. For one thing, states have little say in or control over the health care benefits offered by large employers that self-insure. Those plans come under federal, not state, law.

But that won’t stop several blue states from trying. If Democrats in Washington think they can win reelection based in part on imposing prescription drug price controls, Democrats in blue states will try to do the same.

Originally published by Institute for Policy Innovation. Republished with permission.

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