6 Ways States Have Helped Lower Prescription Drug Costs

From insulin copay caps to importation programs, a look at how states are making medications more affordable

Sarah Hollander,

AARP

Comments

En español

Published May 28, 2024

stacks of pills with a dollar sign and arrow showing each stack decreasing in height

Photo Collage: AARP (Source: Shutterstock)

Legislators at the state level are fighting high prescription drug prices with new laws that help make medications more affordable to their residents.

In 2023 alone, states throughout the U.S. passed nearly two dozen bills focused on the issue and supported by AARP: Some banned price gouging, while others cut copays and set upper payment limits on certain drugs. These wins add to hundreds of earlier efforts from states to bring down high prescription drug costs — and the work continues.

So far this year, AARP is monitoring more than 45 bills in 17 states, says Jonathan Bartholomew, a government affairs director at AARP, which for decades has advocated for prescription drug affordability. As the big drug manufacturers strive for greater and greater profits, Bartholomew says, “prescription drugs will continue to be a hot topic at the state level for the foreseeable future.” And AARP will “fight fiercely to help consumers afford the drugs they need,” he adds.

Here are six ways states helped make prescription drugs more affordable in 2023, plus a snapshot of progress being made so far this year.

1. Developed importation programs

In 2023, Texas became the seventh U.S. state to look to Canada as a source for cheaper drugs through its Wholesale Prescription Drug Importation Act, which directs the state’s Health and Human Services Commission to import certain prescription medications from Canadian wholesalers and suppliers.

“Drug prices in Canada are 30 percent, on average, cheaper than they are in the United States,” says Charles Cascio, senior associate state director of advocacy and outreach for AARP Texas. “So this is just one step closer to accessing cheaper medications for Texans.”

When the bill was introduced, “it was viewed as a really long shot,” Cascio says. But it quickly became a bipartisan effort, he says, and passed nearly unanimously. AARP shared up-to-date price research from AARP’s Public Policy Institute and testified at committee hearings.

Much work remains before the program gets up and running, but Texas is not alone in the endeavor, Cascio says. States started laying the groundwork for drug importation several years ago, and already Colorado, Florida, Maine, New Hampshire, New Mexico and Vermont have passed legislation. Other states are exploring the idea.

Florida is furthest along in the effort. In January, the U.S. Food and Drug Administration (FDA) OK’d the state to continue implementing its plan to seek certain prescription drugs from Canada. However, additional hoops remain. The FDA still must approve specific drug requests, and Florida must find willing suppliers in Canada before any actual importation begins.

The states’ plans differ, so each state will need its own FDA authorization, Bartholomew notes. “But there will be lessons learned so that other states can use what worked in Florida,” he says.

2. Established affordability boards

Two states, Minnesota and New Jersey, voted to establish prescription drug affordability boards (PDABs) in 2023, joining a handful of other states that had already done so. These independent groups — sometimes referred to as affordability councils — review the cost of prescription medications and make recommendations on how to lower prices for those deemed unaffordable, though the authority of each board differs from state to state.

The creation of Minnesota’s PDAB is one development in the state’s ongoing multipronged approach for making prescription drugs more affordable, says Mary Jo George, AARP Minnesota’s advocacy director. The new board has broad authority to review prescription drugs and set upper payment limits that restrict the amount certain payers in the state can pay for a given drug. “Drugs aren’t useful if you can’t afford them,” George says.

Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota and coauthor of AARP’s Rx Price Watch, is one of the board’s seven voting members. An AARP advocacy volunteer who takes a high-cost medication for chronic rheumatoid arthritis sits on an 18-member advisory board made up of patients, health care professionals, industry representatives and other stakeholders.

Two other states — New Hampshire and Maryland — strengthened their affordability boards in 2023.

3. Capped out-of-pocket expenses

Seven additional states passed bills in 2023 to limit copays for certain prescription drugs, bringing the total to 28 states with similar laws on the books. A large portion of the new legislation pertains to insulins for diabetes.

The insulin-related bills extend the benefits of the new federal prescription drug law, passed in 2022, which caps insulin copays at $35 per month for the nearly 4 million Medicare beneficiaries with Part D coverage who use insulin. Legislators in West Virginia, Montana, Nebraska, New Jersey and Illinois followed suit, capping insulin copays at $35 per month for anyone with state-regulated insurance plans.

North Dakota went even lower, setting the copay cap at $25 per month for insulin and related medical supplies. These changes, however, only apply to state employee health plans.

In addition to insulin copay caps, Rhode Island voted to require individual and group health insurance plans with prescription benefits to cover at least one type of prescribed epinephrine auto-injector and cartridges — used to treat severe allergic reactions and commonly known by brand name EpiPen — without a copay or deductible. Rhode Island’s legislation also limits copayment and coinsurance requirements on specialty drugs, as defined under Medicare Part D, to $150 dollars for a 30-day supply.

New Jersey capped out-of-pocket costs for epinephrine injectors and asthma inhalers at $25 and $50, respectively, for a month’s supply.

Drug prices are set nationally, so states are limited in what they can do, Bartholomew says. They can, however, regulate how much in-state payers will pay. “It’s a similar principle as utility rates,” he says.

4. Monitored excessive prices

Minnesota and four other states passed bills in 2023 to stop, or at least bring attention to, unusually high drug prices or price increases.

Minnesota and Illinois banned price gouging — or making excessively high price increases — for generic drugs and gave their attorneys general authority to investigate and penalize offenders.

Two other states voted to require advance notice from drug manufacturers planning to increase their costs above a certain percentage — 15 percent for Florida and 16 percent for New York — within a certain time frame. The notice will give consumers a chance to speak to their health care providers about possible alternative treatments, Bartholomew says.

New York also added medicine, including prescription drugs, to the list of goods and services subject to gouging regulations under the state’s general business law. The bill prohibits the sale of medicine for an “unconscionably excessive price” during a drug shortage, using the price charged immediately prior to a shortage for comparison.

New Jersey created a new data and transparency system within its Division of Consumer Affairs to collect, analyze and report on the entire process of drug pricing across the supply chain.

5. Expanded drug savings programs

Connecticut joined Washington, Oregon and Nevada in ArrayRx, a multistate prescription discount card program. The state anticipates that residents will save up to 80 percent on eligible generics and 20 percent on name-brand prescription drugs through the program.

Utah expanded its prescription drug discount program — which previously included only insulin and epinephrine auto-injectors — to include any prescription drug. While no additional drugs have been added to the state’s program as of yet, the move “gives the board a lot more power to help consumers,” Bartholomew says.

6. Expanded state assistance

Three states in 2023 increased the benefits of their state pharmaceutical assistance programs, which help lower-income populations afford their prescription medications.

New Jersey expanded eligibility for the Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold programs, raising income limits by $10,000.

And a bill passed in Pennsylvania ensured that people enrolled in the state’s PACE or PACENET prescription drug assistance programs for older adults remain eligible even if their Social Security cost-of-living adjustments (COLAs) push them over the financial eligibility threshold. A COLA moratorium, which was set to expire at the end of last year, was extended through the end of 2025. The bill’s supporters argued that more than 20,000 older adults would have lost their benefits without the extension.

Finally, Wisconsin expanded the number of drugs eligible for 100-day supplies for people enrolled in its SeniorCare program. The program previously limited 100-day supplies to certain maintenance drugs, with other drugs only available for up to a 34-day supply. The state also dropped the price of some 100-day SeniorCare prescriptions to a 30-day copay, once a deductible is met.

Making headway in 2024

Progress is still in motion, Bartholomew says, pointing to prescription drug affordability legislation moving forward in Rhode Island. Also, Oregon recently passed AARP-backed legislation that caps copays for insulin at $35 a month or $105 for a 90-day supply, and New York removed all copays on insulin for people in state-regulated health plans.

What’s more, New Mexico and Virginia both passed laws to increase prescription drug price transparency. And plenty of other states are working on similar efforts. “It's still an active front,” Bartholomew says.

%{postComment}%

Unlock Access to AARP Members Edition

Join AARP to Continue

Already a Member? Login

Recommended for You

Benefits Recommended For You

See All