As consultants to, and advocates for our clients, we at PillarRx are constantly reviewing and discussing impactful legislation that affects industry areas of interest to clients. Because of our diverse book of business, the impact of any legislative action can affect different plan types and organizations differently. Accordingly, it is imperative that we continue to be aware of emerging legislation that could change the way our clients do business, and which will either improve—or detract—from their goals as stakeholders in the delivery of health care benefits to enrollees all over the country.

Below are some of the legislative initiatives we’re currently looking at and discussing with our clients as they prepare their short- and long-term strategic pharmacy benefit goals. Contact PillarRx today to discuss how we can help your organization integrate important legislative initiatives and trends into your organization’s goal setting.

Medicaid Expansion 

The American Rescue Plan provides states that newly implement Medicaid expansion with significant new funding, prompting Medicaid expansion discussions among state policymakers and advocates. Addressing non-expansion participating states’ coverage gap drug will continue to be a top priority with the Biden administration and one informed by ongoing federal efforts to incentivize state expansion (or penalize non-participating states).

Drug Affordability Boards

Borne of the National Academy for State Health Policy’s model, Prescription Drug Affordability Boards (PDAB) are intended to operate much like a public utility commission in establishing upper payment limits when a particular state’s PDAB determines that a drug is otherwise unaffordable for state health care purchases and consumers. Costs concerns around establishing PDABs have led to bills dying in state legislature or being vetoed by the Governor. In response to these cost concerns, NASHP has provided a less expensive alternative approach to setting the upper payment limit using the internal reference rate model. This model uses Canadian drug prices (established using reference pricing) for up to 250 high-cost drugs as a way to establish these limits outside of a board. Last year, over 17 states had established or committed to exploring the creation of PDABs.

Drug Importation Programs

(EA on this signed by Pres. Biden in July 2021, expecting roadmap by end of August 2021) At least 18 states considered legislation either expanding or establishing drug importation programs this year. In 2019, the Trump administration outlined a pathway for states to implement time-limited importation programs from Canada, which need to be certified by the U.S. Department of Health and Human Services (HHS). While HHS has not certified any such programs and the Trump-era rule is facing a legal challenge from the Pharmaceutical Research and Manufacturers of America (PhRMA), several states have made progress toward implementing importation programs by submitting proposals to HHS.

Although earlier in the year, there seemed a lack of urgency to push importation forward. In July 2021, President Biden signed an Executive Order that, in part, directed the FDA to provide a plan toward supporting state and tribal programs for the importation of safe and less expensive drugs from Canada. The US FDA allows for drug importation if safety and consumer savings can be assured. Opioids, biologics, injectable medications, and certain other drugs may not be imported.

Pharmacy Benefit Manager (PBM) Legislation

In recent years, states have considered a variety of interventions to regulate the activities of PBMs; the trend continued during the 2021 session. Every state except Idaho and Alaska has current bills in play to address PBM reform, addressing everything from transparency to utilization rules and patient steering.

Thanks in part to a December 2020 decision wherein the Supreme Court ruled in Rutledge v. Pharmaceutical Care Management Association, that state regulation of PBMs and the prices they pay pharmacies on behalf of self-funded group health plans is not preempted by ERISA, the path has been laid for increased state regulation.

Drug Manufacturer Legislation

The Biden Administration has made a commitment to review all areas contributing to the high cost of prescription drugs in the United States, and this must include the drug manufacturers. Concepts like the unsupported price hike penalty proposed by NASHP—which includes applying an 80% cost difference penalty on hiked products – is a direct response to long-standing industry practices of price hikes on products whose intrinsic clinical value has not warranted the rate of increase have significantly contributed to the dramatic and unsustainable rise in health care costs. Multiple states have proposed legislation in response to this model law.

American Rescue Plan (signed into law March 11, 2021)

ARP makes major improvements in access to and affordability of health coverage through the Marketplace by increasing eligibility for financial assistance to help pay for Marketplace coverage. CMS reported 2.5M more people enrolled in federal and state Marketplaces using the special election period in August and 37 states are accepting federal funding to expand Medicaid programs under the ACA.

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