Proposals of State Legislation Concerning Drug Pricing

The development and distribution of pharmaceuticals from conception to market is a complicated and highly regulated process in the United States. The pricing of pharmaceuticals is also complicated and at times opaque. Moreover, many critique the high price of pharmaceuticals. In examining these processes and the high price of pharmaceuticals, some commentators have pointed to some solutions, including improving transparency in pricing; increasing competition in several different relevant markets, such as pharmaceutical benefit managers, distribution and manufacturing; importation of pharmaceuticals into the U.S. from foreign countries; increasing regulation on pharmaceutical benefit managers; and utilizing rate setting or other forms of price regulation. State legislators have proposed legislation capturing these solutions and some legislation has been enacted. However, the question has arisen as to whether these additional solutions only create more complexity in an incredibly complex system--could it be too much of a good thing. Framed another way, do the benefits of this mass of potential legislation outweigh the costs. Indeed, this could be exactly the way a set of prescriptions to high drug prices at the national level, while balancing innovation and access concerns, is developed because of public choice issues at the federal level. However, public choice issues likely exist at the state level as well. This presentation reviews data and analyses by the National Academy of State Health Policy and raises some of the potential benefits and costs of creating 50 different laws concerning issues such as transparency, rate setting, pharmaceutical benefit managers and importation