The 2018 General Assembly session was a banner year for health care affordability and access in Maryland, with members of both parties working together on the creation and funding of a reinsurance pool to drive down costs in the state’s Affordable Care Act exchange. The result was that as premiums continued to spike in the rest of the nation, they actually went down in Maryland, staving off what could have been a death spiral for the individual market. This year, the General Assembly has the chance to lead again in the effort to rein in prescription drug prices.
The House of Delegates voted 98-40 Wednesday in favor of a bill that would create a prescription drug affordability board, a body that would be empowered to evaluate the cost of particularly expensive medications, or those whose prices increase significantly. If after such a review, the board determines that a particular medication presents an affordability challenge, it would set an upper payment limit for that medication for people covered by state or local health care plans other than Medicaid. Backers estimate that would cover potentially 250,000 to 300,000 people. If it proves necessary, the state could later seek to expand the payment limits to all drug purchases in the state.
The pharmaceutical industry and Maryland’s biotech industry both strongly oppose the bill, predicting dire consequences for patients and an important growth sector in the state’s economy. While we acknowledge that the impact of the bill is difficult to predict given the lack of a precedent, their warnings seem out of proportion to what the bill actually does.
This isn’t a broad price-setting scheme — in fact, it doesn’t technically set prices at all but rather creates the opportunity to establish the maximum the state and local governments would pay for a particular medication. It only deals with drugs brought to market with an initial price of more than $30,000 a year, brand-name drugs whose prices increase by more than $3,000 a year or generics that go up in price by more than 200 percent.
Even then, the state wouldn’t necessarily set a price cap. When any of those circumstances occur, the affordability board would work with an advisory council (on which the pharmaceutical industry would be represented) to decide whether an inquiry is warranted. If so, it would consider a wide variety of factors related to the drug’s pricing to determine whether a price cap is needed and if so, what it should be. Manufacturers would have the right to appeal a decision by the board, and if that doesn’t work, they can take the matter to court.
Industry representatives say they are concerned about the cost of medications, but they contend that price controls of any sort will limit patients’ access to life-saving drugs and will stifle research and innovation. Maryland biotech representatives testified that such firms would see this bill as a sign that the state doesn’t understand or appreciate their industry and that they would leave the state if it passes. But this bill does not arbitrarily limit prices; rather, it sets up a system to determine if they are unjustified. And if Maryland sets limits on what it will pay for certain high-priced medications, that has nothing to do with whether it is a good place to develop or manufacture drugs. This bill treats manufacturers no differently whether they’re in Maryland or Virginia or California. The question of whether this measure would survive a legal challenge is certainly legitimate, given that a federal court recently struck down Maryland’s attempt to limit generic drug price spikes. But this bill was crafted in light of the court’s ruling in that case, so there is reason to believe it could stand up to a lawsuit.
It is true that this legislation won’t by itself solve the prescription drug affordability problem, but even in its limited effect — dealing just with very expensive drugs and just for government health plans — the bill is significant. Harford County Executive Barry Glassman, a Republican and supporter of the bill, says two medications alone, accounting for about 300 total prescriptions, ate up more than a third of the money the county spent on prescription drugs last year. We urge the Senate to adopt the House’s legislation.
Meanwhile, we were disappointed by the legislature’s decision to scale back a proposed requirement that most individuals maintain health insurance coverage, intended as a replacement for the federal individual mandate under the Affordable Care Act that was eliminated under the 2017 Republican tax cut bill. Maryland’s proposal would have enabled the uninsured to apply a penalty levied against them on their state taxes to the purchase of qualifying health coverage. Unfortunately, both chambers have passed bills that eliminate the mandate. They do, however, set up a mechanism for Marylanders to report their coverage status on their income tax forms and for the state to help them find affordable insurance and determine their eligibility for subsidies. We don’t think that will be as effective as the original idea in reducing the number of uninsured, but it does at least make it easier for the state to implement a mandate in the future.