Fed up with rising drug costs, a growing number of states are pursuing a novel idea: They want to treat the pharmaceutical industry like a utility and cap what they will pay for certain medicines.
Basically, a newly created rate-setting board or an existing government agency, depending upon the state, would determine an “upper payment limit” for any prescription drug — brand-name or generic — that is considered unaffordable after reviewing cost and pricing data submitted by drug makers. In some states, such a ceiling might also apply to fully insured commercial health plans, not just state health programs. In general, the concept builds on efforts to demand more transparency from the pharmaceutical industry while mimicking how governments determine how much is paid for electricity.
The hope, of course, is to prevent budgets from being further stretched and, importantly, develop a tool to convince drug makers to compromise.
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