Governor Tony Evers’ Task Force on Reducing Prescription Drug Prices has spent the past several meetings hearing from stakeholders in the drug supply chain, as well as drug consumers. At its two-day meeting held on July 21 and 22, pharmaceutical manufacturers had the opportunity to offer their views on factors impacting drug prices.
Both Pfizer and PhRMA (Pharmaceutical Research and Manufacturers of America) cited rebates paid to Pharmacy Benefit Managers (PBMs) as a factor that increases drug prices to the consumer. Pfizer asserted that PBMs require rebates from manufacturers to gain placement of a specific drug on the PBM formulary (the list of drugs for which the health plan will reimburse the health plan member). Policy options suggested by the manufactures include eliminating contracting via rebates, mandating a fee for PBM services rather than a percentage of the drug’s retail price, and paying for outcomes (value-based purchasing).
The second day of the meeting focused on consumer concerns with high drug prices. The nonprofit Northwest Prescription Drug Consortium, serving Washington and Oregon, offers several programs aimed at reducing prescription drug prices. The Consortium operates a PBM, and drug discount card and voucher programs. Their PBM model reduces “spread” (the difference between what the PBM charges a health plan and the amount they reimburse pharmacy) and passes through 100% of all rebates and fees to the pharmacy. The PBM charges fixed administrative fees, performs annual market checks and adheres to strict auditing standards. The voucher programs provide payment on a temporary basis for prescription drugs which are needed by patients upon discharge from a correctional facility or state-operated hospital. The discount card program allows consumers to gain access to brand name drugs at a nominal fee. In 2019, almost 300,000 prescriptions were filled using this discount card. The Consortium aims to increase bargaining power by getting more states to join the Consortium.
AARP, the American Diabetes Association, and Vivent Health shared the perspectives of consumers. AARP discussed the impact of high drug prices on senior citizens, who are high utilizers of prescription medication, and the American Diabetes Association described how the high cost of insulin impedes access to this life-saving drug for one in four diabetics. Vivent Health, which serves people with AIDS, reviewed how the 340B program enables access to expensive AIDS medications for these consumers and allows it to operate dental clinics in Madison and Green Bay, keep behavioral health services accessible in smaller Wisconsin communities, and double the capacity of its food pantry. Peggy Tighe, an attorney involved in state and federal level legislative activity which challenges discriminatory drug pricing practices by PBMs, echoed Vivent’s comments about the benefits of the 340B program to consumers.
On July 24, after the task force met, President Trump issued several Executive Orders on prescription drug pricing. Some of these orders are directed at issues discussed by the Task Force. Specifically, one of the orders would require federally qualified health centers (FQHCs) receiving 340B drug discounts to pass on the 340B discounts to patients with high cost-sharing for insulin or Epi-Pens. Because federal HHS rulemaking power over the 340B program is very limited, the order’s impact on FQHCs may also be limited. The other orders would:
- Tie Medicare payment for outpatient drugs to international prices.
- Pass drug maker rebates on to patients in Medicare Part D. However, last summer the White House pulled the regulation after the Congressional Budget Office estimated the price tag at $177 billion from 2020-2029 and also raise premiums for Medicare beneficiaries.
- Permit Individuals to get their drugs imported from other countries. This order contemplates that the FDA would set up a system allowing safe importation from systems that have comparable regulatory regimes to that of the FDA’s.
Contact WHA Vice President of Policy Development
Laura Rose for additional information on the Governor’s Task Force.