New Michigan Senate legislation is aimed at capping prices for the most expensive prescription drugs.
The three-bill package would do so by creating a five-member Prescription Drug Affordability Board appointed by the governor. The board would have the authority to set upper payment limits on certain medications.
State Senator Darrin Camilleri (D-Trenton) is a package sponsor.
“We are setting a standard for how high those costs can go from the manufacturer. And so, we are not taking responsibility on the part of pharmacists or even insurance companies. We’re talking directly at the manufacturers who we know are charging exorbitant amounts throughout the entire supply chain,” Camilleri told reporters during a press conference Tuesday morning.
Lowering high prescription drug costs has been a main point of discussion at both the state and federal level for years.
During the press conference, several speakers representing legislative, health, and patient interests detailed the need to lower costs.
“The number one reason seniors skip or ration their medication is because they can’t afford them. No one should have to make a decision whether to pay for blood thinner or whether to buy food,” AARP Michigan State Director Paula Cunningham said.
Last year’s federal Inflation Reduction Act allowed Medicare to negotiate drug pricing for the first time. Meanwhile, the drug affordability board legislation had been included on Governor Gretchen Whitmer’s legislative wish list in a speech she gave in late August.
However, the pharmaceutical industry says there’s a reason medicines can be expensive to begin with. One vial of Novolog, a type of insulin, has a market value of about $314, according to drugs.com—though that price is set to drop significantly next year.
Stami Williams is with the industry group Pharmaceutical Research and Manufacturers of America. She said there are important reasons behind how pharmaceutical companies set their prices.
“It takes a lot to put together and to research and to put effort into developing these medicines, and we offer generous rebates," Williams said.
Her organization points the blame for high prices at pharmacy benefit managers. Those are intermediary groups that negotiate medication sales between manufacturers, pharmacies and insurance companies.
"And what’s happening is these pharmacy benefit managers are taking those rebates from Michiganders and then they are charging the people in Michigan full price for their medications,” Williams said.
The state passed a variety of pharmacy benefit manager regulations in February 2022.
Beyond blaming the benefit managers for high medicine costs, Williams said prescription drug affordability boards are flawed.
“Ultimately, it’s just a politically appointed bureaucratic board that is going to stand in the way of innovation,” Williams said.
A handful of other states, like Maryland and Colorado, have passed their own prescription drug affordability board legislation.
Michigan’s, Camilleri said, will avoid undue influence by preventing anyone with ties to the pharmaceutical industry from serving on the decision-making board itself.
“We don’t want to be in a position where those who have industry ties are setting rates. This has to be a consumer-driven, healthcare-driven and advocacy-driven process. Because we want to be one of the strongest places in the country to enact those upper payment limits so that it can be effective,” Camilleri said.
The legislation, however, would also form a 21-member stakeholder council to advise the board.
The governor, along with House and Senate leadership will choose that membership from a mixture of people that includes manufacturer, pharmacy benefit manager and insurance interests.
In states like Colorado and Maryland, drug affordability boards have taken years to get off the ground.
Camilleri acknowledged Michigan's boards would take time to fill. But he said he hopes to start seeing measures implemented as early as next year.
That could be an optimistic view, as Senate Republican leadership is already criticizing the package.