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Prescription price controls in the works in Vermont

Published: 2/17/2020 9:49:34 PM
Modified: 2/17/2020 9:51:45 PM

MONTPELIER — “Drug prices are too high” is a familiar refrain sounded by state regulators and lawmakers. But this year, the issue has reached a tipping point.

Susan Barrett, executive director of the regulatory Green Mountain Care Board summed up the general sentiment: “Somebody has to do something.”

When the state’s two major insurance companies asked for rate hikes of more than 10%, they blamed prescription drug costs, which are determined by private pharmaceutical companies. So did hospitals, when they sought budget increases from regulators last summer.

In response, lawmakers, advocates and insurance companies are calling for more aggressive tactics to keep costs in check.

Here are six new proposed statutory requirements in play:

Insulin costs

Under this proposed mandate, Vermonters with diabetes would pay no more than $100 a month for insulin.

The cost of the drug has skyrocketed nationwide. Many people have been forced to choose between keeping their blood sugar under control and other basic needs like buying food or paying rent. Between 2012 and 2016, prices rose from about $234 a month to $450 a month, according to the Health Care Cost Institute.

Vermont House Bill 822, would limit the out-of-pocket expense to $100 a month per person. Insurance companies — and ultimately ratepayers — would absorb the difference in cost. The bill also asks the Vermont Attorney General’s Office to investigate insulin prices and determine whether new consumer protection measures should be put in place to help keep down costs.

The problem? It wouldn’t apply to people without insurance or to those who get their insurance from a self-funded large employer.

Drug program disclosures

Under the federal 340B program, hospitals can buy prescription drugs at reduced prices, sell them to patients at market rates and keep the difference.

Legislation in front of the House Health Care Committee, H.B. 787, would require hospitals to report the money they make through the 340B program and explain how that money was used. It also asks the Agency of Human Services to suggest changes to the state’s policies on the program.

That bill is up in the air, according to Sen. Chris Pearson, P/D-Chittenden, a sponsor of the Senate version. Sharing and limiting hospital revenue from the program makes sense at the University of Vermont Medical Center, he said. But it could undermine the financial stability of a smaller hospital.

But Pearson said the disclosures make sense.

“There’s something really disturbing here that the 340B is supposed to make prescriptions affordable, and our hospitals are pocketing the difference,” he said.

Drug price caps

The five-member Green Mountain Care Board which regulates health care in Vermont currently has no control over prescription drug prices. A new proposal, introduced in both the House and the Senate, asks regulators to consider setting limits on drug prices.

It would be the first step toward enabling the board to cap drug prices, a measure that has been implemented elsewhere. Maryland has a drug affordability board that sets prices. Maine has established a similar model that goes into effect next year.

The Vermont House and Senate bills, H.B. 785 and S.B. 246, direct the board to evaluate the most expensive prescriptions, including drugs that cost more than $100 a month or that have increased more than 200% over the past year. The legislation charges the board with finding ways to reduce costs.

Importing drugs from Canada

Lawmakers want to take the next steps in the process to buy cheaper prescription drugs from across the border. They voted to create a plan to buy medications from Canada in 2018 — even though it’s prohibited by the federal government. Since then, Vermont has moved forward on the measure: In November, state officials sent a preliminary plan to import the drugs to the feds. The state will submit a formal application by July.

Now, legislators want to take the next incremental step: the bill, S.B. 136, would allow the state Board of Pharmacy to offer licenses for Canadian companies to participate in the drug importation program. The bill was introduced last year and died in committee. If it’s approved, the Board of Pharmacy would create two new prescription drug wholesaler licenses. It also authorizes the Agency of Human Services to implement the importation program.

Another insulin cost-saver

Mike Fisher, the state’s chief health care advocate with Vermont Legal Aid, is asking lawmakers to consider a combination of the insulin bill and the 340B measure. He’s proposing that hospitals be required to sell insulin to patients at 150% of the 340B price they purchase it for, plus a dispensing fee for the pharmacist.

Fisher said he’s heard anecdotal evidence that hospitals buy insulin at $15 and then sell it at the commercial market price of $300.

His proposal would only apply to hospitals, not to private physicians, who don’t qualify for 340B.

Generic drugs

BlueCross BlueShield of Vermont has also taken matters into its own hands. Last month, the state’s largest insurance company announced that it had partnered with the nonprofit Civica Rx to buy generic medication.

Civica Rx manufactures generic drugs that are no longer under patent and then sells them at lower prices, according to Sara Teachout, spokesperson for BlueCross BlueShield. It uses vacant manufacturing space to save money and sell the medication at lower prices, she said.

BCBS of Vermont is one of 18 BlueCross companies nationwide that are participating in the partnership. The cheaper drugs will be available to Vermonters in a year and a half, Teachout said.

“We’re trying to evaluate what would help the most people in the least amount of time,” she said.

Most of the measures introduced by the Legislature won’t ultimately lower drug prices, she said. The Civica Rx partnership, however, “will actually work.”

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