States Implement New Measures to Curb Rising Prescription Drug Prices

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States across the nation are stepping up with initiatives to curb prescription drug expenses for consumers, even though they can’t directly tackle the pricing set by pharmaceutical companies.

Many are targeting pharmacy benefit managers (PBMs), the intermediaries brokering deals among drug manufacturers, insurance companies, and pharmacies.

A number of states are contemplating the establishment of drug affordability review boards, while others are enacting legislation to enhance transparency among manufacturers and PBMs.

This proactive approach has garnered applause from advocates who argue that the federal government’s pace in addressing high drug costs is insufficient. Conversely, critics caution that reducing prices might lead to pharmacy closures and hinder drug development.

Some state laws mandate that PBMs transfer discounts to consumers or disclose more about drug pricing processes. Others have introduced review boards to monitor prices or set caps on copayments for essential medications, such as insulin.

At least 31 states have enacted nearly 70 laws to lower drug costs, according to the National Academy for State Health Policy.

In California, the state capped insulin costs for state-regulated plans and will offer a generic version for $11 a pen, while Maryland is allowing its drug affordability review board to lower prices for all plans, not just state employees, and Colorado has capped the price of the popular rheumatoid arthritis drug Enbrel.

Colorado is the first state to cap the price for all consumers when it comes to Enbrel, a drug used by nearly 2,600 Coloradans. Beginning in 2027, new insurers will pay no more than $31,000 a year for the drug, a decrease from the average insurance payment of $53,049 in 2023.

Other states have passed laws requiring PBMs to pass discounts on to consumers, instead of pocketing the difference between what they pay and what they charge insurers.

PBMs are dominated by three companies: CVS Health, Cigna and United Health Group. That has given those groups market power. Those companies that say they have lowered costs have pushed back against laws to limit prices.

So have drug companies. Amgen Inc., the maker of Enbrel, sued Colorado over the drug review board, saying it would cause economic harm to the company. A federal judge dismissed the lawsuit.