What Are We Doing About It? A Review of 2019 Legislation to Address the Price of Prescription Drugs in Colorado

June 6, 2019
Health Care Costs
Legislation and Policy
Payment Reform

By Allie Hoffman

In a previous blog, I discussed the players and factors integral to the rise in prescription drug prices. The growing consumer burden resulting from these prices has drawn the attention of the Colorado legislature and the governor’s office.

Setting the Stage

In recent years, Colorado lawmakers drafted numerous bills to address the price of prescription drugs. Many of these bills failed because of opposition by Republican Senate leadership, but the 2018 election opened the door for more cost-reduction measures to pass. With the Democratic sweep of state government and Gov. Jared Polis’ emphasis on reducing health care costs for Coloradans, including with prescription drugs, it was clear that the legislature would have a lot to say about pharmaceutical costs during the 2019 session.

The Bills

Four bills addressed some of the pharmaceutical cost issues raised in my prior blog. Three became law. The bills covered a wide range of policy goals, including mandating greater price transparency, allowing drug importation, requiring more up-front information about drug costs, reforming the rebate system, and implementing spending caps.

House Bill (HB) 1131: Prescription Drug Cost Education

Result: Passed and Signed by Governor

Sponsors: Rep. Sonya Jaquez Lewis (D), Sen. Faith Winter (D)

HB 1131 requires pharmaceutical salespeople to disclose the wholesale acquisition price of a medication when they are marketing to prescribers. Representatives also must provide the names and prices of at least three similar generic drugs.

Eight states and the District of Columbia have passed laws that go further, requiring unbiased and evidence-based information about medications rather than asking health care providers to rely on information provided by sales representatives — a requirement known as academic detailing.

Colorado’s bill doesn’t require academic detailing, but it is similar enough that we can draw from the lessons learned in other states. Studies have shown academic detailing to be successful, as many prescribers don’t have time to access the most current information about every medication. A frequently cited 1986 Harvard Medical School study showed that Medicaid saved $2 for every $1 invested in academic detailing with Medicaid prescribers. While HB 1131 isn’t exactly a detailing program, it does provide medical providers with more transparency and information about the price of prescriptions and available alternatives.

The act will take effect on October 1, 2019.

Senate Bill (SB) 5: Import Prescription Drugs from Canada

Result: Passed and Signed by Governor

Sponsors: Sen. Robert Rodriguez (D), Sen. Joann Ginal (D), Rep. Sonya Jaquez Lewis (D)

State legislatures are increasingly looking north of the border for discounted drugs. Nine states considered bills to allow drug importation from Canada in 2018 (the proposal only passed in Vermont), and 27 states took up the issue this year. Colorado’s importation bill failed in 2018, but it was reintroduced this session and passed. Florida also passed an importation bill this year.

SB 5 directs the Department of Health Care Policy and Financing (HCPF), which oversees the state Medicaid program, to establish and run a drug importation program, as long as HCPF can ensure that the program is cost effective and the medications are safe. This program would essentially put HCPF in the wholesale drug business.

The program needs federal approval, and it’s too early to tell how the Trump administration will act. Only Vermont, Colorado, and Florida currently have plans to seek federal permission to import Canadian drugs.

Even if the feds approve, some researchers are skeptical that importing drugs from Canada will really lower the price for Americans. The combined population of Colorado and Florida is larger than the entire population of Canada, so the increased demand could quickly cause pharmacy shelves in Canada to run dry. Pharmaceutical manufacturers could also raise prices in Canada to offset lost profits in the U.S. While importation is largely hypothetical and several steps away, President Trump has indicated that he supports such measures.

HB 1216: Reduce Insulin Prices

Result: Passed and Signed by Governor

Sponsors: Rep. Dylan Roberts (D), Sen. Kerry Donovan (D), Sen. Kevin Priola (R)

Insulin prices have more than tripled since the early 2000s, making this life-sustaining medication unaffordable for some patients and causing federal and state lawmakers to take notice. For insulin-dependent diabetics, affording the medication is a life-and-death matter. This bill addresses the issue by capping patient copayments at $100 for a one-month supply of insulin –– making Colorado the first state to cap the price of insulin.  

Some states have taken broader action, capping copays for all prescription drugs. For example, Maryland set a monthly copay limit of $150 per drug for all private health insurance plans. While this brings some relief to patients who need expensive medications, spending caps don’t get at the root problem of high list prices.

Congress is considering similar legislation at the national level –– a focus that potentially contributed to an April 2019 announcement from Cigna and its Express Scripts subsidiary that they will cap out-of-pocket insulin costs for their members at $25 per month. It’s probable that political pressure and public outrage led to this decision.

Colorado’s act will apply to health plans issued or renewed on or after January 1, 2020.

HB 1296: Prescription Drug Price Reduction Act

Status: Failed after it stalled in the House and ran out of time at the end of the session

Sponsors: Rep. Dominique Jackson (D), Rep. Sonya Jaquez Lewis (D), Sen. Joann Ginal (D), Sen. Kerry Donovan (D)

Lastly, HB 1296 was a reworked version of prescription drug price transparency legislation that has been introduced in previous sessions, but once again this proposal failed to make it to the governor’s desk. Like previous iterations, the bill would have required insurers, pharmaceutical manufacturers, and pharmacy benefit managers (PBMs) to report information to the state Commissioner of Insurance about prescription drugs that either cost more than $100 or increase in price by more than 10 percent in a single year. Eight other states already have pharmaceutical price transparency laws. The first transparency reports won’t come out until later this year, so we don’t know yet how effective other states’ laws have been.

In addition to requiring more transparency around costs and pricing, HB 1296 would have required that 100 percent of savings from rebates be passed along to the consumer at the point of sale instead of staying with PBMs or insurers, as is often the case today.

Transparency alone will not reduce the cost of prescription drugs. Instead, it has been proposed as a mechanism to provide much-needed insight into a complicated industry — a first step on the road to bringing down costs. The insight could be used by lawmakers in states with successful pharmaceutical price transparency laws as they consider new regulations. But for at least another year, Colorado is not part of that group.

Looking Ahead to 2020

Colorado’s 2019 legislative session saw some notable wins for bills aimed at controlling the costs of pharmaceuticals and health care more broadly. Still, there is more work to be done. Partisan arguing and lengthy debates stalled some of the proposed health care legislation, including HB 1296. Bills that failed this year could return in the 2020 session.

Despite my focus on researching state-level legislation, the most potential for impactful pharmaceutical cost control lies with the federal government. States only have limited power to influence prices set by multinational corporations and to regulate costs for consumers, while the federal government has significantly more bargaining and regulatory power. That means that real change ultimately must come from Washington, D.C.

There is currently bipartisan support in Congress to rein in the power of PBMs, and the Trump administration has proposed tying Medicare drug prices to overseas prices for the same medications. Given the combination of federal lawmakers vowing to address high drug costs, a growing field of 2020 presidential candidates pledging the same, and mounting public dissatisfaction, pharmaceutical pricing will continue to be a hot issue across the country. I’ll certainly be tracking future legislation, as I feel that I’ve only begun to scratch the surface of this complicated issue and have a vested interest in a solution.

Allie Hoffman is a recent graduate of the Master of Public Health program at the Colorado School of Public Health who worked with CHI on her capstone project.

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