4 April 2023
Allowing Medicare to negotiate the price of prescription drugs is one of the most popular aspects of President Joe Biden’s Inflation Reduction Act, and a bill proposed by Nevada lawmakers would apply those drug price caps statewide — not just for people on Medicare.
The bill, AB250, is sponsored by Assemblywoman Venicia Considine (D-Las Vegas) and would ensure the state piggybacks off of future Medicare-negotiated prices of a prescription drug once the federal insurance program for people 65 and older sets those prices. If passed, the Nevada measure would go into effect in 2026, aligning with the timeline of the Inflation Reduction Act and giving the state and businesses enough time to adjust to the new pricing of drugs.
“People have the right to have access to medication at a reasonable price,” former Lt. Gov. Kate Marshall said in an interview Monday about the legislation. “Many people in Nevada feel the pressure of inflation, [are] still reeling from the pandemic, are trying to get through their lives. We are obligated as public servants to extend a hand and say ‘I am there with you.’”
Marshall, now a senior advisor for The Impact Project, a progressive nonprofit focused on state-level economic policies, co-presented the bill Monday, along with Considine, Assemblywoman Natha Anderson (D-Sparks) and other policy experts.
However, the bill attracted staunch opposition from drug producers, including pharmaceutical trade group PhRMA, which criticized the proposal for tying the state to federally made decisions on drug negotiations, and said it unfairly targeted manufacturers and not other parts of the supply chain that affect the final price consumers pay.
And despite an amendment carving out labor unions from provisions of the bill, the state’s politically powerful Culinary Union also testified in opposition.
“We want to stop launching large health care experiments in the Nevada legislative session halfway through the session,” said Bobbette Bond, the Culinary Union’s public policy director.
Proponents of the bill said the measure is not subsidizing the price of drugs, just setting the maximum fair price for them. Three fiscal notes attached to the measure from the Department of Health and Human Services, the attorney general’s office and the Department of Business and Industry indicate that it will not cost the state any money if implemented.
“Drug companies are recording record earnings but still hiking prices that Americans pay for drugs that we need to survive,” Considine said during the bill hearing Monday. “This is about people. This is about giving relief to people.”
How the bill works
Medicare is a federal health insurance option for seniors and those with disabilities. The insurance option is managed and funded by the federal government, and the U.S. Centers for Medicare and Medicaid Services (CMS) is the single largest payer for health care in the United States.
Under the Inflation Reduction Act signed by Biden in August, officials within the Department of Health and Human Services can negotiate lower prescription drug prices for seniors, cap the cost of insulin and make certain recommended vaccines free for all Medicare recipients, among other actions.
The act stipulates that the federal government negotiate prices for some drugs covered under Medicare. It gives the Department of Health and Human Services the ability to negotiate prices for a small number of single-source brand drugs that don’t have generic competitors and are covered by Medicare, setting a “maximum fair price” for a given drug.
Before the passage of the act last year, Medicare was prevented from interfering or negotiating prices for any prescription drugs, instead requiring them to reimburse providers based on a formula tied to the average price paid by other non-Medicare purchasers. Supporters say that allowing Medicare to negotiate drug prices will allow the federal government to leverage its massive purchasing power to lower prices, especially among high-priced drugs without competitors.
Negotiations will set prices for 10 drugs in 2026, another 15 in 2027, another 15 in 2028 and another 20 in 2029. Health and Human Services officials will select the drugs to negotiate from about 50 drugs with the highest Medicare spending and consider production cost and distribution, time on the market (at least seven years) and data on pending and approved patent applications.
The bill Nevada lawmakers are considering would adopt the Medicare-negotiated prices of drugs and ensure any future negotiated drug price changes apply for all Nevadans, regardless of whether they are on Medicare. The lowered drug price would last as long as the negotiated agreement unless there is a change, such as a generic drug that comes to the market.
The legislation also stipulates that any company or individual found to be selling prescriptions at a price higher than the maximum fair price would be in violation of deceptive trade practice laws and face civil actions.
Considine said the negotiated prices will be announced in September, but she expects the first 10 pharmaceutical drugs to include ones treating blood clots leading to strokes, diabetes, lung cancer, breast cancer, arthritis, asthma and chronic kidney disease.
According to testimony submitted by the National Academy for State Health Policy, similar laws are being considered in Connecticut and Maine. The group said it was too early to determine the financial effect of the bill on Nevada but said the estimated large federal savings ($98.5 billion over 10 years) would “undoubtedly translate into large savings at the state level.”
Proponents also said the measure aims to limit the cost of drug prices Nevadans are paying, and numerous public commenters testified to the prohibitive cost of drugs required to stay alive. One teacher from Clark County said they spend almost $25,000 a year on diabetes-related medication.
“There is no reason that we should have to decide between: do we pay our rent? Do we pay our car bills? Do we buy groceries? Do we pay for our medication?” Jamie Tadrzynski said. “For so many Nevadans, myself included, that’s our reality.”
Dharia McGrew, director of state policy for PhRMA, opposed the bill alongside other industry representatives. In her testimony, McGrew said patient out-of-pocket costs are too high, but the policy would not necessarily lower the price of drugs. She added that the true problem lies with insurance companies imposing higher deductibles and other costs.
Brian Warren, the director of government affairs at the Biotechnology Innovation Organization, also said the trade organization opposes the bill because it does not reflect the realities of the prescription drug supply chain and could hurt investment in future innovations.
“These are providers that they’re going to be put in an untenable position of saying, ‘Do I lose money every time I give this drug to a patient? Why do I not stock this prescription drug at all?’” Warren said. “That’s a big problem that we see with this.”
Though the bill initially applied to all Nevadans, an amendment attached to the bill would allow labor unions with a collective bargaining unit, such as the Culinary Union and SEIU 1107, to decide whether to opt into the negotiated prices because they already negotiate health care prices for their members.
Despite the amendment, Bond from the Culinary Union testified in opposition to the bill, saying that the union was not involved in the crafting of the amendment and would like to work on the bill in a future session.
“I am uncomfortably on this side of the table and I hope I see you on the flip side of the table by next session,” she said. “We’d really like a participation process where everybody gets to continually create great legislation.”
When reached for comment about the legislation, a spokesperson for Gov. Joe Lombardo said his office is monitoring all bills as they work through the legislative process and will engage when necessary.
Marshall said during closing remarks that she was “disturbed” by the notion that bill proponents had not worked on the bill with other parties. She said that much of the opposition appeared to be thinly veiled criticism of the already-passed federal law allowing for drug negotiations.
“This is not the place to re-litigate the Inflation Reduction Act,” Marshall said. “This is the place to incorporate it by reference so that the other 83 percent of people in Nevada can take advantage of the maximum fair price established by Medicare.”
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