Just how much are states spending on prescription drugs? And, which drugs account for their greatest expense? As state policymakers grapple with solutions to the problem of rising drug costs, officials are performing research to provide critical evidence and tools needed to inform policy. Two recent state efforts to document their prescription drug costs may provide a roadmap for other states.
In Vermont, a new law approved in 2018 required its Agency for Human Services to research and report back a plan to the state legislature to evaluate and implement wholesale importation of high-cost drugs from Canada. The recently-released report found that significant savings would result from importation. Based on just 17 drugs identified for two of the state’s three major carriers, compared to Canadian prices the savings would range from $1 to $5 million annually.
The National Academy for State Health Policy (NASHP) was pleased to work with the state on the study and developed a new tool and worksheets states can use to identify the drugs that account for the highest “spend” (factoring in cost and volume) for payers in the state and compare their prices to those charged in Canada for the same drug.
Seven states have enacted transparency laws to provide detailed information about high-cost drugs. California led the way and recently the Maine Health Data Organization (MHDO) used its all-payer claims database to respond to a legislative mandate to collect information and report on:
- The 25 most frequently prescribed drugs in the state;
- The 25 costliest drugs, determined by the total amount spent on those drugs in the state; and
- The 25 drugs with the highest year-over-year cost increases as determined by the total amount spent on those drugs in the state.
MHDO has issued its report and made the data available to the public in the form of a dashboard that allows users to toggle between payer types (commercial, Medicaid, Medicare Advantage, and all-payers) and brand-name or generic drugs.
These are just two examples of the value of researching and evaluating drug costs, and they provide strategies and tools other states can adopt to identify high-cost drugs — a critical first step to inform policy choices.