With pharmaceutical companies entering their first month of federal drug pricing reform under the Inflation Reduction Act, a Connecticut board meets Tuesday to weigh any initial impact of the law in Connecticut and other possible measures to rein in costs.
Last spring, the Connecticut General Assembly took testimony on a proposed state board to control prescription drug costs, without bringing a bill to a vote by the assembly. A handful of other states have similar boards, with Maine authorizing its panel to compare what its Medicaid program pays for drugs against prices paid by select Canadian provinces under laws there.
The Connecticut Office of Health Strategy is scheduled to discuss the impact of the Inflation Reduction Act on Tuesday as part of its regular monthly meeting.
Enacted in August, the federal Inflation Reduction Act includes several provisions intended to limit prescription drug prices, notably rebates for Medicare that take effect next year if drug companies increase prices faster than the rate of inflation over the coming 12 months starting October 1.
Just over 1,200 drugs exceeded the inflation rate over 12 months through July, for an average price increase of nearly 32 percent, according to an analysis released in late by the U.S. Department of Health and Human Services. About seven in 10 people polled early this year by the Kaiser Family Foundation described as “easy” the affordability of the prescription drugs they use, but 83 percent of those responding said they still regard prescription drugs as overpriced.
The CEO of Danbury-based MannKind said last week that drug companies are under intensified cost pressure themselves, due to the financial muscle of insurance companies and pharmacy benefit managers and the impact of inflation on their own operations. MannKind makes an inhaled diabetes treatment in Danbury, and recently began production of inhalers for pulmonary hypertension.
“When there are increases in drug prices, most of that increase goes back to the payers,” said MannKind CEO Michael Castagna, speaking as part of the annual meeting for the Greater Danbury Chamber of Commerce. “They’ve locked in all these prices for the next five or 10 years. We don’t have pricing power anymore.”
Castagna acknowledged the burdens for some families in paying for needed drugs, while noting the huge cost and risk for companies in getting a drug approved and the hurdles in getting insurance companies to approve them for their networks.
“We’ve got to try something different — I’m not saying we’re an innocent industry and we’re not guilty of some of the accusations,” Castagna said. “But in general it takes so much money to bring a drug to market — $2 billion to $3 billion.”
Under the Inflation Reduction Act, insurance premiums cannot rise more than 6 percent annually between 2024 and 2030 for Medicare Part D coverage that includes prescription drugs. Out-of-pocket costs will be capped at $2,000 annually starting in 2025. And insulin copays will be capped at $35 a month beginning in January, with the White House having estimated 35,000 people in Connecticut will benefit who receive insulin through Medicare.
In an analysis of the new law’s impact on Connecticut, the White House took aim at a drug produced by one of the state’s larger employers — Spiriva, the blockbuster asthma drug made by Boehringer Ingelheim Pharmaceuticals which has its U.S. headquarters in Ridgefield. Spiriva cost $250 on average in the United States in 2020, according to the White House, versus $52 in Canada.
The proposal last spring for a drug price control board drew opposition from multiple entities, to include the Connecticut Insurance Department which said it would be costly to enact as written, and the Pharmaceutical Research and Manufacturers of America whose members include Pfizer, Boehringer Ingelheim and a number of other household names.
“The idea that price controls will not negatively impact innovation is false,” said Kelly Ryan, deputy vice president of state advocacy for PhRMA, speaking last March to a committee of the Connecticut General Assembly. “The science is getting harder, clinical trials are more complex and the need to pivot quickly has been especially clear in these past two years.”
Last month, a senior Pfizer executive used stronger language, labeling the new law “an attack on medical innovation.” Pfizer has its headquarters in New York City and a large campus in Groton that oversees safety studies of drugs under development.
“We look at access and pricing, so of course this is going to factor into how we make decisions on how we allocate our capital — it has to,” said Aamir Malik, chief business innovation officer for Pfizer, speaking in September during a health industry conference sponsored by Morgan Stanley. “At the same time, we’re not going to be knee-jerk about it and you’re not going to hear us declare that we’re all of a sudden in one area [or] out the other. There’s still a lot of this that still has to play out.”