The state legislatures have been as busy as ever in 2023—especially in the health care sector. Now, as many legislatures across the country are adjourned for the year or are in recess, it is a perfect time to dive into this year’s state legislative sessions.
To get an idea of what is going on in health on the state level Bio.News sat down to talk with BIO’s Vice President of State Government Affairs, Patrick Plues. Here’s what he says are the five things to pay attention to in the state legislatures when it comes to health care and the biotech industry.
Prescription Drug Affordability Boards (PDABs) and Maximum Fair Price (MFP)
“The perennial issue that we’re seeing once again is the introduction of PDABs,” says Plues. As Bio.News reported last year, “PDABs are state boards that aim to cap, control, and dictate the price of drugs that manufacturers can charge.”
In 2023, PDAB bills were introduced in twelve states. PDABs have continued to show up as priorities in some state legislatures and, in some ways, have been bolstered by aspects of the Inflation Reduction Act (IRA), passed last year.
In May, Minnesota enacted SF 2744, joining Maryland, Washington, Oregon, Maine, Colorado, and New Hampshire in the creation of a PDAB in their state. In June, New Jersey Governor Murphy signed a package of prescription drug bills, including S 1615 that creates the New Jersey Prescription Drug Council, which is similar in construct to a PDAB, but it does not have authority to set upper payment limits (UPL) on therapies.
Colorado’s PDAB, which was created in 2021, is the first in the country to move forward with affordability reviews of therapies, which potentially lead to UPL assigned to those therapies that the PDAB determines are priced too high based on the affordability review. Yet, there have been critical errors in Colorado’s Prioritized List.
As BIO & Colorado BioScience Association explained in written testimony in August, “Our organizations oppose the creation and enforcement of upper payment limits in general due to the negative unintended consequences we believe will occur on payment access to medicines, on health care providers purchasing medicines, and on the market for innovative biopharmaceutical products. Nonetheless, to the extent the Board and the PDAAC are fulfilling statutory obligations, each step should be taken with care to prevent errors. The Board should be using accurate data as well as take careful consideration of the impact on patient access and market dynamics in selecting products.”
The Inflation Reduction Act (IRA) has also proved to have an effect on legislation in the states. “I think a new element to this issue is the intersection now between some provisions that were in the federal IRA are now bleeding into the states where you have certain states looking at the maximum fair price construct (MFP) that was developed under the IRA,” explains Plues.
This has happened in Minnesota where that state’s newly created PDAB has authority to use MFP as standard in setting a UPL. In Nevada, a bill setting the MFP as a reference price for all prescription drugs dispensed in the state passed the legislature, but was vetoed by the Governor.
Medicaid access to innovative therapies
Medicaid access to innovative therapies for patients reflects not only the advancement of biotechnology and innovation for historically untreatable diseases, but also the challenges therein with maintaining a dynamic and responsive Medicaid system that responds to patient needs. As a result, BIO has prioritized helping states develop new payment structures that meet patient and state budgetary needs halfway.
“These innovative therapies are often one-time, durable therapies—or even potentially curative therapies—that have high upfront costs, but lower downstream costs,” explains Plues. “However, the current Medicaid model is set up to pay for chronic disease medicines by paying outlays every year on a specific therapy. So we’re working with states to think of ways to provide access to these new therapies and look at different, more innovative, payment models around these therapies.”
Oregon’s HB 2499 was introduced earlier this session in an effort to improve the administration of the state’s Medicaid program. It included provisions to make the Oregon Health Authority (OHA)’s Pharmacy and Therapeutics Committee process more transparent; the timing of meetings more predictable; and ensure more stakeholders are included in its meetings.
Meanwhile, in Minnesota, legislation was passed into law in May to promote alternative payment arrangements in Medicaid for therapies where the traditional fee-for-service model is a challenge—this legislation built on similar efforts in Ohio and Texas.
The 340B program continues to be an issue across the country and many states are taking a swing at solving the problem in a myriad of ways. “The 340B program has traditionally been a federal government program, but now states are getting involved in managing it,” says Plues. “States are now stepping in and starting to regulate the 340B Program predominantly around how therapies are reimbursed and dispensed through contract pharmacies.”
Currently, state 340B legislation is primarily intended to regulate Pharmacy Benefit Managers (PBMs), particularly around how they reimburse contract pharmacies for dispensing 340B products; however, some of the bills include mandates on prescription drug manufacturers that would force manufacturers to supply contract pharmacies with product, even though the federal 340B statute does not include “contracts pharmacies” in the program.
This year, to address concerns with the 340B program, Iowa passed HF 423, and Louisiana passed HB 548. 340B bills in Connecticut, Missouri, Mississippi, North Dakota, New Mexico, and Virginia failed this year, while 340B bills remain active in California, Kansas, Massachusetts, Nevada, Oregon, and Texas.
Consumer data privacy
This topic may not come first to mind when you think about health care legislation since consumer privacy is typically discussed with a focus on tech and commerce companies. However, when it comes to medical innovation, public health, and patient population needs, consumer privacy is an important topic for biotech to be involved in.
“California passed the California Consumer Privacy Act in 2018,” says Plues, “it did create interest from other states to look at how consumer data is used and how they can regulate the use of that data.”
A few examples of data privacy legislation this year include Delaware HB 154, the Delaware Personal Data Privacy Act, Oregon SB 619, and Montana SB 351.
“Consumer data privacy does have some direct implications on our industry,” explains Plues, “particularly around health care data, and data that companies collect from clinical trials and how that data is used.”
While big data is typically the main target of consumer privacy laws, there is always a chance that biotech could be impacted too. This year in Montana, SB 351 was enacted in May, which created the Genetic Information Privacy Act. This bill primarily focused on privacy requirements for direct-to-consumer genetic testing companies, but included some areas that raise some concerns for clinical trials and biomedical research in the state. And Washington enacted HB 1155 in April, which created the My Health My Data Act to establish health information-specific privacy protections. The bill includes some exemptions for biomedical research, but the focus on health information raises concerns about the implications on the evolving landscape for biotech research.
It wouldn’t be a mid-year state health care round-up if we didn’t talk about vaccines. And, not surprisingly, state legislative action has only gotten busier when it comes to vaccine legislation with over 370 vaccine-related bills introduced in 43 states this year.
Much of the legislation was aimed at COVID-19 vaccines, though some bills have broader implications beyond COVID. This year, the bills tended to fall into a few categories: vaccine requirements, health department authority, medical freedom, and mRNA.
Unfortunately, there will be a long road uphill for the foreseeable future when it comes to making sure that dangerous and misinformed vaccine legislation does not pass and threaten the health of Americans nationwide.
All in all, health care is still the hot-button topic it has always been in the states. Yet, the changing landscape of both health care, the post-pandemic economy, medical innovation, and technology are proving that the states will have more than enough to contend with in the coming years—issues both perennial and novel. And it is more important than ever to keep an eye on state policy as it is the barometer for not only how national policy is playing out, but also what policy issues we can expect on the horizon.
“We always say that state legislatures are the laboratories for democracy,” concludes Plues. “So, we see a lot of ideas that bubble up from the states that go to Congress and vice versa.”