States are not able to alter patent protections or set prices but Colorado is no longer waiting for the federal government to act.
According to a recent article in Chicago Sun Times, the state’s residents spend over one billion dollars every year on the purchase of drugs. This bill is intended to reduce out-of-pocket costs for medication.
An affordability board for prescription drugs would review prices charged for medications purchased by consumers and set price limits.
The approach would not be broad-based or produce deep cuts. It is estimated, however, that the end result would be savings to people in Colorado of twenty to forty percent. The Board will have the responsibility of ensuring that consumers benefit from these savings.
Note that Colorado is also in negotiations with drug companies in an effort to link prices with drugs based on their effectiveness in reducing hospitalizations.
Highlights of the Bill
A drug would receive an affordability review if:
- Its price increases over ten percent in one year
- If the price of a brand-name drug exceeds $30,000 per year
- If the price of a generic drug exceeds $100 per month per person
- Consumer advocates and patients will be allowed to nominate drugs to be reviewed
- The Board is permitted to set price limits for twelve drugs each year
- The Board could submit recommendations for various types of legislative or administrative action that would lower costs
The Lichtenbelt Family Paid Substantial Out of Pocket Costs But Saved Their Son’s Life
Eighteen-year-old Koen Lichtenbelt of Ridgeway in Colorado has had a rare autoinflammatory disorder since early childhood that caused damage to his nerves. His doctors prescribed Hizentra, which would cost his parents $10,000 each month out of pocket.
His parents paid the out-of-pocket charges for three months until their insurance company agreed to cover the drug. His parents equated the $30,000 to the price of a car and stressed that their son’s life depended on the drug.
The new bill would help people in these difficult situations.
A Word From the Opposition
The pharmacy, hospital, and pharmaceutical industries have not been silent. The pharmaceutical industry is threatening not to sell drugs that face payment limits.
Proponents of the bill expect it to pass. They contend that it is doubtful that a manufacturer could isolate specific drugs. They note that many of the high-priced drugs are currently sold at a discount to community clinics, Medicaid, and charity hospitals.
Opponents of the bill insist that it would cause unpredictability and would be more difficult to secure funding for research and development.
Yet the bill seems destined to be approved.
New Technology for Electronic Medical Records
A launch date of July 1, 2021 is scheduled by the governor’s office to implement a tool that is embedded in electronic medical records. It allows prescribers to see what patients who have private or public health plans are expected to pay for a specific medication.
At this writing, eighty percent of Colorado prescribers already have enabled the tool. It is now being used well ahead of schedule by thirty-seven percent of prescribers.
Drugs From Canada, Australia, and France
Colorado had approved the importing of low-cost drugs from Canada. The state has now received federal approval and estimates that Canadian imports could reduce the cost of fifty ordinary drugs by sixty-three percent.
In comparison, state officials in Colorado have estimated a savings of between seventy-eight to eighty-four percent for imports from Australia and France.
However, federal law would have to be adjusted in order for Colorado to receive imports from France and Australia.
Pharmacy benefit managers control drug prices that are paid by insurance companies. In December 2020, the Supreme Court ruled that states are allowed to regulate pharmacy benefit managers. At this writing, there are ninety-seven measures to that effect being considered by various states.
It is noteworthy that the Children’s Health Insurance Program began as state measures.