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Characteristics of State Legislation Addressing Prescription Drug Price Increases in the United States, 2020

INTRODUCTION

Large price increases of prescription drugs are common in the USA.1,2 This practice creates affordability challenges for patients—particularly those with high-deductible plans and the uninsured.3 In response, states have developed legislation to address price increases, but little is known about legislation in this area. In this cross-sectional study, we provide a snapshot of current legislative activity by characterizing state price increase bills considered in 2020, in the context of price increase laws to date.

METHODS

We searched the National Conference of State Legislatures (NCSL) prescription drug database under the topic “Pricing and Payment – Industry”, restricting the search to 2020 for bills and using the extent of the database (2015–2020) for laws—anticipating the earliest in 2017.4 We combined these results with legislative inventories and reports from the National Academy for State Health Policy (NASHP), a nonpartisan tracker of state drug pricing legislation, to generate our initial sample.

We included legislation incorporating ≥1 provision addressing drug price increases and excluded legislation that limited the scope of drugs (e.g., diabetes only or “15 costliest drugs”) because legislation limited to commonly prescribed or costly drugs may overlook drugs in smaller markets where price increases are common and substantial.2,5,6 We characterized 2020 bills by drug types targeted, price increase thresholds, reporting requirements, timing of reporting, sponsorship, and other characteristics. Data was collected 10/15/2020–01/15/2021.

RESULTS

After excluding 5 laws due to narrow scope, 15 laws (11 states) addressing price increases met inclusion criteria. These laws all fit within three categories (defined in Fig. 1): 10 transparency, 4 affordability review, and 1 anti-price gouging law in Maryland, later judged unconstitutional.4 After excluding 23 bills due to narrow scope (i.e., insulin; costliest/most commonly prescribed 10–25 drugs), 69 price increase bills were characterized. Most bills also fit within three categories: transparency (32/69; 46%), affordability review (18/69; 26%), or anti-price gouging (16/69; 23%). Aggregate characteristics of these categories are summarized in Table 1.

Figure 1
figure 1

Time line of enacted state prescription drug price increase legislation.

Table 1 Aggregate Characteristics of State Price Increase Bills Considered (Not Enacted) in 2020

DISCUSSION

Three categories of price increase legislation—transparency, affordability review, and anti-price gouging—account for all 15 state laws to date and 94% of bills considered in 2020. Most laws were enacted within the past 2 years, suggesting legislative momentum. As outstanding bills must be re-introduced in subsequent legislative biennia, our study offers lawmakers several considerations to enhance the likelihood that price increase legislation benefits patients.

Among the 32 transparency bills, 44% do not require manufacturer notice until after the price increase has occurred, possibly a response to legal pushback against California’s transparency law (SB17) requiring prospective notice.4 In theory, this post hoc stipulation compromises effectiveness, since patients may not become aware of a price increase until the point of purchase.

Maryland and Maine passed laws creating affordability review boards in 2019, followed by New Hampshire in 2020 (Fig. 1). Thirteen other states filed 18 similar bills in 2020. This legislation goes beyond transparency, allowing for payment limits when prices or price increases create “affordability challenges” for payors or patients.7 Unlike the Maryland and Maine laws—whose effectiveness has been questioned—most 2020 bills (72%) empower the board to set reimbursement levels for reviewed drugs without involving a separate entity.7 Additionally, many (61%) do not mandate manufacturer reporting, leaving procurement of pricing information to the board through “other means”, which may result in missed price hikes. Importantly, few (22%) specify off-patent off-exclusivity (OPOE) drugs—off-patent brand-name drugs without generic competition that are cheaper than patent-protected brand-name drugs but prone to price hikes.2 Failure to specify OPOE drugs subjects them to higher “brand-name” board review thresholds (e.g., increase of $3000 for a 1-year supply or “treatment course”) where smaller absolute price increases that are large on percentage basis may be overlooked.

Limitations include the exclusion of 23 price increase bills due to narrow scope, which are likely to lower state spending and benefit some patients, and the possibility of missing legislation enacted before 01/01/2015 or legislation missed by search criteria.

Modifications to legislative language relating to timing, reporting, and drug types could increase the impact of state transparency and affordability review legislation. Although no anti-price gouging laws have been enacted since Maryland’s, 2020 state lawmakers demonstrated a continued interest in this legislation. Recently announced model anti-price gouging legislation—including provisions to avoid repeating history—may be introduced as early as 2021.8

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Acknowledgements

The authors would like to thank Annie Krapek, Amber Kerrigan, and Ruth Parriott (all of the Twin Cities Medical Society) for their expertise regarding the state legislative process.

Funding

This work was funded by Arnold Ventures

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Correspondence to Arman A. Shahriar B.S..

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Shahriar, A.A., Vazquez Benitez, G., Pawloski, P.A. et al. Characteristics of State Legislation Addressing Prescription Drug Price Increases in the United States, 2020. J GEN INTERN MED 37, 1554–1557 (2022). https://doi.org/10.1007/s11606-021-06838-x

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