New law sets cap on insulin prices

Monitor staff
Published: 7/17/2020 4:01:01 PM

A bill signed yesterday by Governor Sununu will cap the price of insulin for patients.

The bipartisan effort offers a suite of healthcare reforms, including a limit of $30 on copayments for each 30-day supply of insulin and a provision that requires insurance companies to cover epinephrine auto-injectors, which are used in the case of an allergic reaction.

This change follows several states who have passed similar measures in the last few months, such as New York, Maine, and Washington. However, New Hampshire’s cap is one of the lowest in the country, only rivaled by Utah which also has a $30 cap.

Critics worry that increased restrictions on insurance companies will ultimately cause the prices of premiums to rise, as companies look for ways to recuperate their lost revenue.

“There’s no free lunch in economics,” said Andrew Cline, the president of the Josiah Bartlett Center for Public Policy. “You cap a price for one thing, the insurer makes up for it somewhere else.”

The bill also changes the way pharmacy benefit managers, or PBMs, will operate in the state. PBMs serve as middlemen between pharmaceutical companies and insurance providers. One of their primary responsibilities is to negotiate with drug makers to set prices of medications.

Typically, the state sends out a request for proposals, asking PBMs to submit what kinds of prices they can offer the state. However, the proposals are often extremely complicated and difficult to compare, which can cause the state to choose a PBM that isn’t in their own best interest.

The new “reverse auction,” as proposed by this bill, reverses the bidding process from many sellers and one buyer to one seller and many buyers. Instead of asking each PBM to submit their own proposal, the state will present the benefit design they want and have PBMs make their best offer.

Then, on the next rounds of bidding, each PBMs’ proposal is made public to the other bidders, in hopes that the transparency will incentivize better deals for the state.

In a study funded by the Josiah Bartlett Center for Public Policy, economists predict the new bidding method could save the state $22.2 million dollars on prescription drugs.

New Jersey implemented a similar system in 2018, and has since reported saving 25% on PBM costs, or about $1.6 billion. New Hampshire is the second state to implement a program like this.

New Hampshire is in its second year of a three-year contract with Express Scripts, a PBM based in Missouri. Cline said given the difficult financial situation the state is in right now, the state should attempt to renegotiate their current deal. If successful, the state could save millions of dollars.

“That’s a lot of staff that don’t have to get furloughed, a lot of services that don’t have to get cut,” he said.

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