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Prescription Drug Pricing

The Problem

Access to essential medications is a critical component of good health, especially for those with chronic medical conditions. However, escalating costs of prescription medications are driving up premiums, out-of-pocket costs, and state spending. A recent national poll by the Kaiser Family Foundation found that 29% of Americans didn't take medications as prescribed due to cost during the past year. This development has serious implications for the quality of life for New Mexicans, both in terms of health and financial well-being.

While some attribute these trends to changes in cost sharing arrangements, the evidence shows that pharmaceutical manufacturer pricing practices are the underlying driver of spending increases. A growing body of research shows that drug manufacturers are pricing medications based on profit maximization rather than providing access to critical medications. Prices have come completely untethered from actual costs and people are suffering because of it.

Efforts to address the issue at the national level have not yet come to fruition, leaving New Mexicans to face impossible costs that put their health and well-being in jeopardy. As other states take action to address this problem, New Mexicans and state policymakers are eager to find common sense solutions. 

The Solution

There are several opportunities upcoming for national and state action to lower prescription drug prices.

On the national stage, Speaker Nancy Pelosi recently announced a plan to allow the federal government to negotiate the prices of 250 prescription drugs without market competition. The prices would be tied to the international pricing index for that drug. Once a price is negotiated, companies that do not comply and attempt to charge higher would be subject to steep financial penalties up to 95% of their profit for that drug.

On the state policy side, an Interagency Drug Purchasing Council was created during the 2019 session that brings together state agencies that purchase prescription medications to review and coordinate strategies and ultimately negotiate a lower bulk price for the medications.

However, more state action is needed in the 2020 and 2021 sessions to ensure New Mexicans have access to the prescription medications they need. Health Action has submitted a proposal for a grant that would allow us to form a coalition with the aim of passing further legislation to keep drug prices low. During the 2020 budget session, we hope to pass transparency legislation to pave the way for ambitious reforms in the 2021 policy session. This reform legislation may include:

  • Price transparency and justification
  • Drug Importation (tribal sovereignty angle)
  • Drug affordability review
  • Bulk purchasing
  • Drug coupons, discounts, and rebates
  • Price gouging

Policy Status

This project is in the coalition-building phase. If you or your organization are interested in becoming part of this coalition, please email gabriella@healthactionnm.org

News and Resources

Understanding The House Democrats’ Drug Pricing Package

https://www.healthaffairs.org/do/10.1377/hblog20190919.459441/full/?utm_source=Newsletter&utm_medium=email&utm_content=House+Democrats++Drug+Pricing+Package%3B+Section+1557+Litigation%3B+Medicaid+s+Income+Eligibility+Requirements%3B+Cultural+Competence%3B+Physicians++Reactions+To+ACA&utm_campaign=HAT+9-19-19