Prescription drug manufacturers continue to raise prices. Meanwhile, Colorado recently announced updated plans for a program that aims to bring lower-cost options to consumers.
You might think these sound like old headlines. You wouldn’t be entirely wrong. PERA On The Issues covered the rise of drug prices in January 2020 and last summer looked into executive actions that aimed to keep prices down.
So when GoodRX, which compiles data on medication costs, reported that companies raised the price on 822 brand-name drugs by an average of 4.6% in January, it was news. But it wasn’t necessarily new.
“The rise in prescription drug prices is a trend we have been monitoring for years,” said Jessica Linart, PERA’s Director of Insurance. “When drug manufacturers raise prices insurers must pay those higher costs, which unfortunately get passed on to consumers in the form of higher premiums.”
This is an issue that affects every type of insurance: employer-based and retiree plans alike.
PERACare uses multiple strategies to keep drug prices down to the extent possible. Some are administrative, such as using competitive bid processes to get the best pharmacy pricing from insurance carriers. PERACare staff works with consultants and other industry groups to monitor legislation that can impact drug costs.
Another strategy is to give retirees choices to keep costs down where possible. Incentivizing the use of generic equivalents instead of name-brand drugs and filling prescriptions through the mail, when possible, can save retirees money and help reduce overall plan costs.
Colorado’s Plans to Address Rising Prices
In January, The Colorado Department of Health Care Policy and Financing released an update on a number of plans underway that address rising costs. These updates include:
Import Drugs From Canada
Colorado has been developing a program to import some drugs from Canada, where prices are often lower than equivalent drugs in the U.S. This program originated in a bill signed into law in 2019. However, Colorado must coordinate and comply with federal regulations. The report states: “The Department estimates that Colorado will have an operational importation program by 2023.”
Give Prescribers Useful Information Sooner
The Department has created a tool for people who prescribe prescription medication in Colorado. The first phase of the project helps prescribers assess opioid risks. The second phase, which the Department expects to be operational this summer, provides information like co-pays and drug prices so that prescribers can make cost-effective decisions for patients.
Target the Highest-cost Drugs
Not all drugs are created equal. Some specialty drugs — drugs that are often complex or treat rare diseases — cost so much that they can affect the entire system. The report states: “an analysis of fiscal year (FY) 2019-20 claims data from Colorado Medicaid revealed that 1.42% of the prescriptions written to care for Medicaid recipients were so expensive, they represented 48% of total pharmacy expenditures.” Colorado is analyzing the impact these drugs have. “These numbers are similar to what we see with the PERACare plans,” Linart said. “Anything that can be done to moderate the pricing on specialty medications will be a benefit to retirees on those PERACare plans.”
See What Other States are Doing
Every state across the country faces similar challenges related to rising prices. And every state is coming up with ideas to address them. The Department surveyed more than 431 bills it found in state legislatures nationwide and shared its findings for others to consider.