Americans are spending more on prescription medications than any other developed nation in the world.
A report by the Organization for Economic Cooperation and Development found that patients in the U.S. spend an average of $1,200 per year on prescription medications.
“We’ve seen incredible increases with the cost of medications both with just simple generic medications that have gone up significantly in price but also new drugs,” said Gina Moore, an associate professor for the University of Colorado Skaggs School of Pharmacy and the former president of the Colorado Pharmacist Society.
The cost structure of these medications is complicated; the process involves the drug makers, pharmacy benefit managers, insurance companies, pharmacies and more.
“It is one of the most complicated systems in the health field right now,” said state senator-elect Sonya Jaquez Lewis.
Jaquez Lewis is currently serving as a state representative but is also a licensed pharmacist in Colorado.
Drug pricing starts with the manufacturer, who researches, creates, prices and then markets the medication.
Pharmacy benefit managers then work with the manufacturers to negotiate rebates on the medications.
“Pharmacy benefit manager is that part of your insurance that manages your prescription benefits,” said Moore. “They make a profit just like all businesses, so some of the criticisms of pharmacy benefit managers are that they also get rebates and things with their negotiations.”
The rebates help determine where on an insurance company’s formulary the medication is placed. A formulary is a list of prescriptions your insurance company covers; the higher the tier, the less the patient pays out of pocket.
“Your accessibility to prescription drugs is tied to who you work for or what your insurance is, and it’s different for everyone and that’s why drug prices are so complicated,” Jaquez Lewis said.
Over the years, Colorado lawmakers have tried to lower the price of prescription medications.
In 2019, legislators passed a bill to look into a program to import medications from Canada at a lower cost.
Colorado and at least three other states have asked the Department of Health and Human Services (DHHS) to be granted a waiver that allows the importation program to move forward. However, none of the states have received a waiver to date.
The idea is something that has also been discussed on a national level with the Trump administration. In September, DHHS finalized rules to allow for proposals to import the medications from Canada on a state-by-state basis. The rule would also allow pharmacies and wholesalers to import the medications.
The rule is already facing a lawsuit from Pharmaceutical Research and Manufacturers of America (PhRMA), the Partnership for Safe Medicines, and the Council for Affordable Health Coverage.
Canada also announced in late November that it will limit bulk exports of medications in order to safeguard the country’s prescription medication supply.
During the 2020 legislative session, Colorado lawmakers also tried to bring more transparency to the pricing process in the form of two bills. The bills aimed to look at the rebate process, high-cost medications, pricing and the role of each of the players involved.
However, before either bill could go through the proper hearing process, the COVID-19 pandemic hit, fundamentally shifting the priorities of lawmakers to focus on pandemic response during a tough budget projection.
This upcoming legislative session, Jaquez Lewis says she is once again committed to dealing with medication costs and plans to introduce a bill that will assess price increases.
With the pandemic still dominating the state’s economic and public health conversations, though, any bill not specifically focused on pandemic response, particularly those with big fiscal notes, could face a tough road ahead.