As the nation grapples with the pandemic, new research has identified dexamethasone, a low-cost generic drug, as a promising treatment for certain COVID-19 patients. But consumers worry – will its cost remain low? Will new treatments be affordable?
Section 1. Statement of Legislative Intent; Purpose
The purpose of this Chapter is to protect the safety, health and economic well-being of [name of state] people by guarding them from the negative and harmful impact of excessive and unconscionable prices for prescription drugs. In enacting this Act, the legislature finds that:
- Access to prescription drugs is necessary for XXXXX people to maintain or acquire good health;
- Excessive and unconscionable prices negatively impact the ability of XXXXX people to obtain prescription drugs and such price increases thereby endanger the health and safety of XXXXXX people to maintain or acquire good health;
- Excessive and unconscionable prices for prescription drugs threaten the economic well-being of XXXXXX people and endanger their ability to pay for other necessary and essential goods and services including housing, food and utilities;
- Excessive and unconscionable prices for prescription drugs contribute significantly to a dramatic and unsustainable rise in health care costs and health insurance that threaten the overall ability of XXXXXX people to obtain health coverage and maintain or acquire good health;
- Excessive and unconscionable prices for prescription drugs contribute significantly to rising state costs for health care provided and paid for through a) state funded medical assistance programs for XXXXX people who are older, living with disabilities or have low incomes; and b) health insurance programs for public employees, including employees of the state, municipalities and counties, school districts, institutions of higher education, and retirees whose health care costs are funded by public programs, thereby threatening the ability of the state to fund those programs adequately and further threatening the ability of the state to fund other programs necessary for the public good and safety, such as public education and public safety; and
- Based on findings (1) through (5) the legislature finds that excessive and unconscionable prices for prescription drugs threaten the safety and well-being of XXXXXX people and find it is necessary to act in order to protect XXXXXX people from the negative impact of excessive and unconscionable drug prices.
Section 2. Definitions
(a) “Prescription Drug” has the same meaning stated in [Cite to State’s Pharmacy Act]
(b) “Wholesale Acquisition Cost” has the meaning stated in 42 U.S.C. § 1395w-3a.
(c) “Consumer Price Index” means the Consumer Price Index, Annual Average, for All Urban Consumers, CPI-U: U.S. City Average, All items, reported by the United States Department of Labor, Bureau of Labor Statistics, or its successor or, if the index is discontinued, an equivalent index reported by a federal authority or, if no such index is reported, “Consumer Price Index” means a comparable index chosen by the Bureau of Labor Statistics.
(d) “Generic or Off-Patent Drug” means any Prescription Drug as to which any exclusive marketing rights granted under the federal Food, Drug, and Cosmetic Act, § 351 of the federal Public Health Service Act, and federal patent law have expired including and any drug-device combination product for the delivery of a generic drug.
Section 3. Excessive Price Increases Prohibited
(a) It is a violation of this subtitle for a manufacturer to impose an excessive price increase, whether directly or through a wholesale distributor, pharmacy or similar intermediary or intermediaries, on the sale of any Generic or Off-Patent Drug sold, dispensed or delivered in the state to any consumer in the state.
(b) A price increase is excessive for purposes of this subtitle when
(1) the price increase, adjusted for inflation utilizing the Consumer Price Index, exceeds (A) fifteen per cent of the Wholesale Acquisition Cost during the immediately preceding calendar year, or (B) forty per cent of the Wholesale Acquisition Cost during the immediately preceding three calendar years, and
(2) the price increase, adjusted for inflation utilizing the Consumer Price Index, exceeds thirty dollars for (A) a thirty-day supply of such Generic Drug, or (B) a course of treatment of such Generic Drug lasting less than thirty days.
(c) It is not a violation of subsection (a) of this section for a wholesale distributor or pharmacy to increase the price of a Generic or Off-Patent Drug if the price increase is directly attributable to additional costs for the drug imposed on the wholesale distributor or pharmacy by the manufacturer of the drug.
Section 4. Registered Agent and Office Within the State
Any entity that sells, distributes, delivers or offers for sale any Prescription Drug in the state is required to maintain a registered agent and office within the state.
Section 5. Enforcement
(a) The administrator of benefits for state employees, or any entity of state government that provides or purchases a pharmacy benefit, or any entity under contract with state government to provide pharmacy benefits, or any other entity of state government, shall notify the manufacturer of a Generic or Off-Patent Drug and the Attorney General of any price increase in violation of Section 3 above.
(b) Within 45 days of receipt of notice under subsection (a), the manufacturer of the Generic or Off-Patent Drug shall submit a statement to the Attorney General:
(1) itemizing the components of the cost of producing the drug;
(2) identifying the circumstances and timing of any increase in materials or manufacturing costs that caused any increase during the preceding year in the price of the drug;
(3) providing any other information that the manufacturer believes to be pertinent to a determination of whether a violation of this subtitle has occurred.
(c) The Attorney General may require a manufacturer and distributor to produce any records or documents that may be relevant to a determination of whether a violation of this subtitle has occurred.
(d) On petition of the Attorney General, a circuit court may issue an order:
(1) compelling the manufacturer of Generic or Off-Patent Drug:
(A) to provide a statement required under subsection (b) of this section; or
(B) to produce records or documents requested by the Attorney General under subsection (c) of this section that may be relevant to a determination of whether a violation of this subtitle has occurred;
(2) restraining or enjoining a violation of this subtitle, including an order requiring prices be restored to levels that comply Section 3 above;
(3) requiring the manufacturer to provide an accounting to the Attorney General of all revenues generated in violation of Section 3 above;
(4) restoring to any consumer, including any third-party payor, any money acquired as a result of a price increase that violates this subtitle;
(5) requiring that all revenues generating in violation of Section 3 be remitted to the state to be used for efforts designed to reduce the cost to XXXXXX consumers of acquiring Prescription Drugs, if a manufacturer is unable to determine the individual transactions necessary to provide the restitution described in subsection (d)(4) above;
(6) imposing a civil penalty of up to $10,000 a day for each violation of this subtitle; and
(7) providing for any other appropriate relief, including attorney’s fees and costs reasonably incurred by the Attorney General in bringing action against a manufacturer found in violation of Section 3 above.
(e) With respect to subsection (d)(5) above, every individual transaction in violation of Section 3 is determined to be a separate violation.
Section 6. Prohibition on Withdrawal of Generic or Off-Patent Drugs for Sale
(a) It shall be a prohibition of this Chapter for any manufacturer or distributor of a Generic Drug to withdraw that drug from sale or distribution within this state for the purpose of avoiding the prohibition of price increases set forth in Section 3 above.
(b) Any manufacturer who intends to withdraw a Generic or Off-Patent Drug from sale or distribution from within the state in order to avoid a prohibited price increase as described in Section 3 of this part shall provide a notice of withdrawal in writing to the Board of Pharmacy and to the Attorney General 180 days prior to such withdrawal.
(c) The Attorney General shall assess a penalty of $500,000 on any entity, including any manufacturer or distributor of a Generic or Off Patent Drug, that it determines has withdrawn a Generic or Off-Patent Drug from distribution or sale in the state in violation of subsection (a) or (b) of this Section.
The Centers for Medicare & Medicaid Services (CMS) has proposed a new rule with provisions designed to advance value-based purchasing (VBP) arrangements with drug manufacturers. Comments about the proposal are due July 20, 2020.
Removing wasteful drugs from formularies and replacing them with drugs that offer the same benefits at a lower cost, helps state employee health plans and other public purchasers reduce spending without sacrificing value – a critical strategy for savings as states face tremendous budget pressures.
States are experiencing a huge rise in the number of people without health insurance in the wake of mass layoffs resulting from the COVID-19 pandemic and are seeking strategies to protect them from high prescription drug prices. The uninsured are sometimes the only consumers left paying the full list price for a drug, while the insured benefit from drug discounts negotiated on their behalf.
Last week, a California Court of Appeal lifted an injunction that prevented the state from sharing drug manufacturers’ advance notice of drug price increases. The ruling was a win for states working to advance drug price transparency in the face of manufacturers’ sometimes overly-broad claims of trade secret protection for their prices.
Absent sufficient evidence from clinical trials that proves a variety of drugs are effective against COVID-19, many states are providing guidance to limit their use and have begun monitoring them for price increases and shortages. Building on experience from states’ drug price transparency laws, policymakers now have tools to track these drug costs and identify any price spikes that may occur.
Since 2017, nine states (CA, CT, ME, NV, NH, OR, TX, VT, and WA) have passed drug pricing transparency laws that require data from manufacturers related to drug price increases and high-priced new drug launches. Officials in Oregon are building on the capacities of their drug price transparency programs to track changes in the prices of drugs identified as potential treatments for COVID-19.
Because reporting directly from manufacturers is required only once a year, Oregon is using monthly reports from Medi-Span to monitor prices of these potential treatments in the interim. If price spikes do occur, manufacturers will have to submit justifications for those price increases under states’ transparency laws. The National Academy for State Health Policy (NASHP) will soon release additional policy resources for states enabling enforcement action if price gouging is detected.
The table below provides an overview of some of the drugs currently being evaluated as potential treatments for COVID-19. (For a full list of drugs with ongoing clinical trials for COVID-19 treatment, Transparimed, a non-profit that advocates for greater disclosure of clinical trial data, has created a COVID-19 clinical trials tracker.)
|Drugs Under Evaluation for the Treatment of COVID-19|
|Remdesivir||Gilead||Antiviral||Investigational drug not yet on the market.|
|Hydroxychloroquine3||Multiple||Antimalarial, also used to treat lupus and rheumatoid arthritis||32 cents/200 mg tablet|
|Chloroquine Phosphate3||Multiple||Antimalarial||$9.84/500 mg tablet|
Common brands: Zithromax Z-Pak, AzaSite, Zithromax TRI-PAK, Zmax, and Zithromax (Used in combination with hydroxychloroquine)
|Antibiotic||$0.66/250 mg tablet|
Brand: Kaletra (Typically used in combination with ritonavir)
|HIV protease inhibitor||$8.29/200/50 mg tablet (Kaletra)|
Brand: Norvir (Typically used in combination with lopinavir)
|HIV protease inhibitor|| $1.63/100 mg tablet
$8.35/100 mg tablet (Norvir)
(Antibody to the IL-6 receptor designed to reduce lung inflammation)
|Price not available on the National Average Drug Acquisition Cost database|
- Information found in the Drugs@FDA database –https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm
- Prices found in the National Average Drug Acquisition Cost (NADAC) database on Medicaid.gov – https://data.medicaid.gov/Drug-Pricing-and-Payment/NADAC-National-Average-Drug-Acquisition-Cost-/a4y5-998d
- On March 28, 2020, the FDA issued an Emergency Use Authorization (EUA) to allow hydroxychloroquine sulfate and chloroquine phosphate products donated to the Strategic National Stockpile to be distributed and prescribed by doctors to hospitalized teen and adult patients with COVID-19, as appropriate, when a clinical trial is not available or feasible.
The research group 46Brooklyn has released a tool for monitoring price changes that may also be of interest to states. Their Abnormal Drug Price Increase Tracker (ADPIT) identifies generic drugs experiencing “abnormal” price increases, measured by the National Average Drug Acquisition Cost (NADAC) database. Due to the volatility of generic drug prices, it can be challenging to determine if a generic price increase is excessively high or in line with historical data. Some price increases may result from shortages. The ADPIT seeks to capture if an increase is “abnormal” by comparing it to the previous 52 weeks of NADAC data.
States are also monitoring for potential price increases or shortages of drugs that treat respiratory complications related to COVID-19, such as albuterol inhalers. For example, some state employee health plans (SEHPs) are also closely watching changing drug prices during the COVID-19 pandemic. Plan administrators are using historical claims data to identify the previous prices paid for certain antimalarial drugs that may be used for COVID-19. SEHPs hope to use this information to gauge where prices should be for a drug in case it is determined to be an appropriate treatment. They are also making adjustments to their formularies to minimize the impact of shortages, such as for inhalers.
For additional information on states’ drug pricing transparency programs, including their authorizing statutes and current transparency reports, explore NASHP’s Center for State Rx Drug Pricing.
At least 11 states have acted to limit the dispensing of chloroquine and hydroxychloroquine – prescription drugs that have been cited as providing protection against coronavirus (COVID-19) without adequate clinical evidence to support that claim. To protect consumers with or at risk of COVID-19 and to prevent stockpiling of these drugs, which treat malaria, rheumatoid arthritis, and lupus, at least 10 state pharmacy boards have issued rules and recommendations that limit the use of these drugs while assuring those with non-COVID-19-related illnesses can continue to receive their medicines.
These state actions were taken before the US Food and Drug Administration’s (FDA) emergency authorization allowing the limited use of chloroquine and hydroxychloroquine. FDA stipulated that the drugs “may only be used to treat adult and adolescent patients who weigh 50 kg or more and are hospitalized with COVID-19, for whom a clinical trial is not available, or participation is not feasible.” The FDA had earlier authorized drug manufacturers to donate these drugs to the Strategic National Stockpile for distribution to hospital for these targeted populations.
FDA’s authorization is limited and may be accommodated by state regulatory guidance. Other states are expected to – and may have already implemented – similar limits on dispensing or other guidance regulating the use of these drugs in the fast-moving world of protecting consumers and the supply of drugs during the COVID-19 pandemic
To date, seven states prohibit pharmacists from dispensing these drugs unless the prescription bears a written diagnosis consistent with evidence of its use.
- New York explicitly requires prescribing of these drugs for a Food and Drug Administration-approved indication or as part of an approved trial. North Carolina, New York, and Ohio also require a confirmed positive COVID-19 test result prior to dispensing the drugs for that experimental purpose.
- Most states limit supply to 14 days and limit or prohibit refills.
- New York and Ohio explicitly prohibit use of the drugs for experimental or prophylactic purposes.
- Texas and North Carolina include additional drugs in their new rules, all of which have been cited either by social media or by limited studies to hold promise for the treatment of COVID-19.
- Pharmacy boards in Louisiana, Kansas, and Missouri have issued recommendations that encourage pharmacists and prescribers to use due diligence and professional judgement when prescribing these drugs and to limit the quantities prescribed.
At least one state insurance department has issued guidance detailing the prescribing of chloroquine and hydroxychloroquine. Last week, the Massachusetts’ Insurance Commissioner released a bulletin to all health insurers with the stated expectation that carriers directly, or through their pharmacy benefit managers, establish prior authorization systems to prevent the hoarding of these drugs and avoid inappropriate prescribing.
The National Academy for State Health Policy will continue to track and provide updates about state actions.
Maryland’s first-in-the-nation Prescription Drug Affordability Board (PDAB), enacted last year, has the authority to set upper payment limits for certain high-cost drugs purchased by state and local government. The board is also tasked with proposing a plan to extend upper payment limits to all purchasers in the state. This Q&A provides an update on Maryland’s implementation of its PDAB.
Who sits on Maryland’s PDAB?
The five appointed members of the PDAB include a pharmacist, clinician, and health policy researchers. They are:
- Van Mitchell, President/CEO of MSI, Inc. and, former Secretary, Maryland Department of Health and Mental Hygiene (PDAB Chair);
- Eberechukwu Onukwugha, MS, PhD, Associate Professor of Pharmaceutical Health Services Research, University of Maryland School of Pharmacy;
- George Malouf, MD, FACS, Optholmalogist in private practice and affiliated with the University of Maryland Capital Region Health Prince George’s Hospital Center;
- Gerard Anderson, PhD, Professor, Health Policy and Management, Johns Hopkins Bloomberg School of Public Health;
- Joseph Levy, PhD, Assistant Scientist, Health Policy and Management, Johns Hopkins Bloomberg School of Public Health.
When does the Maryland PDAB meet?
The board’s first two meetings were in January and February of 2020. Its initial tasks include hiring an executive director and developing a five-year budget and staffing plan. The staff is likely to consist of four to five people. The board will meet at least four times a year to complete its work.
How is Maryland’s PDAB funded?
The board has proposed legislation for the 2020 Maryland General Assembly session to fund its work through assessments on pharmaceutical manufacturers and other entities within the drug supply chain, including pharmacy benefit managers (PBMs), health plans, and wholesalers. The $800,000 allocated from the state’s General Fund to cover the PDAB’s start-up costs must be repaid to the state with the funding source that the board creates.
When will the PDAB begin setting upper payment limits for drugs?
Maryland’s PDAB has a phased-in approach to setting upper payments, beginning with placing upper payment limits on drugs for state and local purchasers before potentially expanding its reach to include all purchasers in the state. Maryland’s PDAB will begin to set upper payment limits for public payers in 2022 — pending approval by the state’s Legislative Policy Committee.
In 2023, the PDAB will recommend whether the assembly should pass legislation to expand the board’s authority to make high-cost drugs more affordable by setting upper payment limits on drugs for all purchasers (both public and private). The law also authorizes the board to explore other strategies to improve drug affordability, including bulk purchasing of drugs and reverse auction, a procurement method in which bidders compete by decreasing prices in response to an invitation to bid until a specified deadline.
Which drugs will the PDAB set upper payments for?
If authorized by the Legislative Policy Committee, the PDAB will begin setting upper payment limits in 2022 for certain high-cost drugs that surpass the price thresholds identified in the 2019 law. The Maryland PDAB will work with other states that are already collecting drug price data through transparency laws in order to establish memorandums of understanding for obtaining information to determine which drugs the PDAB should consider for review. While the thresholds specified in the law that trigger mandatory reviews focus on very high-cost drugs, the board also has the authority to review any drug deemed to cause an affordability issue for Maryland’s health care system or patients.
How are other stakeholders involved?
In addition to establishing the five-member PDAB, the Maryland law also establishes a 26-member advisory council that includes a diverse range of stakeholder opinions. Advisory council members represent brand-name and generic drug manufacturers, PBMs, health care advocates, labor unions, employers, researchers, clinicians, pharmacists, and hospitals. The public will have the opportunity to review and provide comments on proposed upper payment limits before any payment limits are finalized.
Has Maryland’s PDAB faced a legal challenge?
Maryland’s PDAB law has not been challenged as of March 3, 2020. However, once the PDAB begins to set upper payment limits, a legal challenge is expected. Unlike Maryland’s anti-price-gouging law, which was struck down for regulating prices outside the state, the PDAB is clearly limited to setting upper payment limits for purchasers within the state only.
Are other states enacting or considering PDABs?
Maine enacted a PDAB law in 2019. Rather than setting upper payment limits, the Maine PDAB establishes a spending target for prescription drugs for public payers and advances strategies to leverage public purchasing power to meet that target. Strategies can include establishing a common drug formulary, bulk purchasing of drugs, collaborating with other states, and other approaches.
Twelve states are currently considering PDAB legislation, including Arizona, Florida, Illinois, Massachusetts, Minnesota, Missouri, New Jersey, Pennsylvania, Rhode Island, Virginia, Vermont, and Washington.
The National Academy for State Health Policy (NASHP) released the original Model Act to establish a PDAB several years ago, and is currently working on new approaches to setting upper payment limits without having to establish a PDAB. These more streamlined models may be necessary alternatives for states when establishing a PDAB is not feasible.