Do we have the power to negotiate drug prices?
Highlights from the HCFA-WA 2023 Annual Educational Conference and Meeting
By Consuelo Echeverria
An unprecedented increase in pharmaceutical drug prices has left many Washingtonians unable to pay for their medications. On the other hand, Pfizer topped the $100 billion mark in annual revenue, a biopharma record. In this landscape, we asked, do we have the power to negotiate drug prices?
Senator Karen Keiser laid out her 2024 legislative agenda with bills that control the price of insulin and EpiPens as well as a Constitutional Amendment for Reproductive Rights.
Our presenters led a conversation on federal and state solutions to control drug prices, including state based manufacturing of generic drugs to bypass Pharmacy Benefit Managers and change the balance of power.
- Gabriel Levitt from Prescription Justice who has guided patients to overcome regulatory barriers to import personal prescriptions.
- Dana Brown from The Democracy Project who has developed a toolkit for states on public drug manufacturing.
- Karen Keiser, the President Pro Tempore of the Washington State Senate, longtime healthcare champion leading our state efforts, including Washington’s new Prescription Drug Affordability Board.
Do we have the power to negotiate drug prices?
Our presenters had a wide-ranging conversation on drug prices starting with some background for the landscape analysis.
The Affordable Care Act (ACA) changed the affordability and access to prescription drugs for patients, payers, and providers. But due to pressure from the industry and the need for Congressional buy-in, the ACA stopped short of regulating drug prices and instituting systemic changes in how drugs are priced.
Instead of regulation, there is a non-interference clause stating that the HHS Secretary “may not interfere with the negotiations between drug manufacturers and pharmacies and insurers”. This left the market wide open to drug price gouging (EpiPen & insulin) forcing many Americans to choose between groceries or their medications.
However, after decades of unprecedented increase in drug pricing, a couple of Federal and local laws have passed which allow us to say “Yes” we can negotiate drug prices.
The Veterans Administration (VA) has negotiated drug prices for years. Sen. Sanders highlights findings that the VA pays half of what Medicare Part D pays for the same drugs.
2022/23 - The Inflation Reduction Act allows the Federal government to negotiate the price on 10 essential drugs. But we need to cover more!
2023/24 - Congressmembers Dingell (MI-06), Merkley (D-OR) and Welch (D-VT) have sponsored The End Price Gouging for Medications Act which will ensure Americans do not pay more for prescription drugs than residents in other OECD countries where the same drugs sells for a fraction of what we pay in the U.S. The bill text can be found here. A bill summary can be found here.
State Based Solutions
Bypass Pharmacy Benefit Managers (PBMs); we do not need them.
PBMs are middlemen that negotiate the formularies, prices, payments, rebates and claims of drugs between insurance providers and drug manufacturers.
The role of rebates is very opaque. It allows PBMs to hide their profit margins from outside scrutiny. When PBMs negotiate rebates with drug manufacturers, they often do not pass the savings along to the pharmacy or patient. In addition, they even claw back the co-pay previously paid on the original price.
One strategy to overcome PBMs is Mark Cuban’s CostPlus Drugs which imports generics and charges manufacturers' prices plus a flat 15% markup and pharmacist fees.
A better solution is to create a state-run PBM with no private entities at all, an Interstate Purchaser Model. Since 1985, the Minnesota Multistate Contracting Alliance for Pharmacy negotiates directly with manufacturers and wholesalers for discounts on behalf of thousands of governmental facilities and agencies in all 50 states.
Closer to home, is Washington and Oregon’s ArrayRx. created in 2006. The Consortium allows states’ agencies, local governments, businesses, labor organizations, and uninsured consumers to pool their purchasing power for affordable drugs. While the Consortium has a PBM, there is 100% transparency – with rebates passed through in full.
Another strategy is for states to produce and market drugs. For example, CalRxBiosimilar Insulin Initiative is CA’s move to publicly manufacture generic insulin which WA can purchase directly. This in effect cuts out the middleman.
We at HCFA-WA advocate for state-based strategies that change the balance of power.
Now on to some current state solutions on Sen. Karen Keiser’s 2024 legislative agenda:
1) A 30-day free emergency supply of insulin for low income folks.
This bill is a continuation of Sen. Keiser's long support for access to this life saving drug that many cannot afford and therefore skip or ration.
2020: HCFA-WA worked with Sen. Keiser on her bill for a $100 co-pay cap on insulin.
2022: Sen. Keiser led a bill capping the out-of-pocket cost of insulin at $35 a month set to expire on Jan. 1, 2024 due to anticipated federal action.
2023: Sen. Keiser again went to bat and removed the Jan 1, 2024 expiration date so a 30-day supply of insulin is now capped permanently at $35 for all Washingtonians.
In the 2024 legislative session, Sen. Keiser plans to champion a bill which allows low-income seniors and families an emergency monthly supply of insulin for free.
2) Price cap on EpiPens
Sen. Keiser is taking the lead in WA along with five other states, to cap patients' out-of-pocket costs for EpiPens at $60. EpiPens and other epinephrine autoinjectors are life saving devices whose price has increased over 400% and now cost between $300 to $700 for 2 pens, which is out of range for many Americans.
The cost of EpiPens also is a significant burden to Medicaid which is a major provider of these devices, as the program covers over 30 million children
EpiPen’s price gouging practice has brought parent company Mylan to court. The case revealed Mylan’s plans to ward off generics and be the sole provider in the USA. Read more about how they conspired for record profits.
3) Constitutional Amendment for Reproductive Rights
As we all know reproductive rights are under threat throughout the USA. Many women who live in states with abortion bans are coming to Washington for their reproductive care.
Sen Keiser’s bill to Amend WA State Constitution to address reproductive freedom will provide the strongest state level protection for reproductive rights.