Unsupported Price Hikes: Drug manufacturers will be penalized in NASHP’s new model bill

The National Academy for State Health Policy’s (NASHP) newly introduced model law, an Act to Protect Consumers from Unsupported Price Increases on Prescription Drugs, charges substantial fines on pharmaceutical manufacturers that impose unjustified price increases and then uses the fines’ revenues to lower costs for consumers.  This is in response to unpredictable and unrelenting drug price increases that are driving up health insurance premiums.  State public purchases are trying to manage escalating costs against the balanced budget requirements.

The Institute for Clinical and Economic Review (ICER) recently released findings from a sampling of seven frequently prescribed and high-cost medicines, including Humira and Lyrica, showing that net unsupported price increases resulted in additional $4.8 billion in spending over two years, much of which went to the manufacturers’ bottom line at the expense of consumers.  ICER has pledged to identify and evaluate high-use, high-cost drugs, and issue a report identifying those whose net price increases are unsupported by evidence. The drugs selected thus far mirror the list of drugs identified by states with drug transparency laws and ICER has formalized a process for other states and stakeholders to identify additional drugs for future review. NASHP’s new model law, developed in collaboration with its Pharmacy Cost Work Group, uses ICER’s annual list to identify unsupported price increases.

(Source:  Riley T, Reck J. NASHP, July 28, 2020)