How Can Excessive Price Increases Be Better Regulated?

Much of the overall spending on prescription drugs in the United States can be attributed to price increases, resulting in penalties being imposed on drugmakers for excessive price increases . Despite high launch prices, many prices for single-source (branded) drugs increase above the rate of inflation leading to substantial spending for drugs purchased outside of the Medicaid program.

Currently there are two roadmaps being proposed to regulate excessive price increases. One, the “Massachusetts Model,” as outlined in legislation proposed in Massachusetts in 2019 and spearheaded by Gov. Charlie Baker; and the second by the Institute for Clinical and Economic Research (ICER). Both models scrutinize large price increases while acknowledging evidence showing that high prices may be worth paying when a drug is delivering good value. Read more about these two roadmaps here.

(Source: Michelle Mello and Stacie B. Dusetzina, NASHP’s Proposal for Imposing Penalties on Excessive Price Increases for Prescription Drugs, August 14, 2020)