6 Ways States Have Helped Lower Prescription Drug Costs

Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota and coauthor of AARP’s Rx Price Watch, is one of the board’s seven voting members. An AARP advocacy volunteer who takes a high-cost medication for chronic rheumatoid arthritis sits on an 18-member advisory board made up of patients, health care professionals, industry representatives and other stakeholders.

Two other states — New Hampshire and Maryland — strengthened their affordability boards in 2023.

3. Capped out-of-pocket expenses

Seven additional states passed bills in 2023 to limit copays for certain prescription drugs, bringing the total to 28 states with similar laws on the books. A large portion of the new legislation pertains to insulins for diabetes.

The insulin-related bills extend the benefits of the new federal prescription drug law, passed in 2022, which caps insulin copays at $35 per month for the nearly 4 million Medicare beneficiaries with Part D coverage who use insulin. Legislators in West Virginia, Montana, Nebraska, New Jersey and Illinois followed suit, capping insulin copays at $35 per month for anyone with state-regulated insurance plans.

North Dakota went even lower, setting the copay cap at $25 per month for insulin and related medical supplies. These changes, however, only apply to state employee health plans.

In addition to insulin copay caps, Rhode Island voted to require individual and group health insurance plans with prescription benefits to cover at least one type of prescribed epinephrine auto-injector and cartridges — used to treat severe allergic reactions and commonly known by brand name EpiPen — without a copay or deductible. Rhode Island’s legislation also limits copayment and coinsurance requirements on specialty drugs, as defined under Medicare Part D, to $150 dollars for a 30-day supply.

New Jersey capped out-of-pocket costs for epinephrine injectors and asthma inhalers at $25 and $50, respectively, for a month’s supply.

Drug prices are set nationally, so states are limited in what they can do, Bartholomew says. They can, however, regulate how much in-state payers will pay. “It’s a similar principle as utility rates,” he says.

4. Monitored excessive prices

Minnesota and four other states passed bills in 2023 to stop, or at least bring attention to, unusually high drug prices or price increases.

Minnesota and Illinois banned price gouging — or making excessively high price increases — for generic drugs and gave their attorneys general authority to investigate and penalize offenders.  

Two other states voted to require advance notice from drug manufacturers planning to increase their costs above a certain percentage — 15 percent for Florida and 16 percent for New York — within a certain time frame. The notice will give consumers a chance to speak to their health care providers about possible alternative treatments, Bartholomew says.

New York also added medicine, including prescription drugs, to the list of goods and services subject to gouging regulations under the state’s general business law. The bill prohibits the sale of medicine for an “unconscionably excessive price” during a drug shortage, using the price charged immediately prior to a shortage for comparison. 

New Jersey created a new data and transparency system within its Division of Consumer Affairs to collect, analyze and report on the entire process of drug pricing across the supply chain.

5. Expanded drug savings programs

Connecticut joined Washington, Oregon and Nevada in ArrayRx, a multistate prescription discount card program. The state anticipates that residents will save up to 80 percent on eligible generics and 20 percent on name-brand prescription drugs through the program.

Utah expanded its prescription drug discount program — which previously included only insulin and epinephrine auto-injectors — to include any prescription drug. While no additional drugs have been added to the state’s program as of yet, the move “gives the board a lot more power to help consumers,” Bartholomew says. 

6. Expanded state assistance

Three states in 2023 increased the benefits of their state pharmaceutical assistance programs, which help lower-income populations afford their prescription medications.

New Jersey expanded eligibility for the Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold programs, raising income limits by $10,000.

And a bill passed in Pennsylvania ensured that people enrolled in the state’s PACE or PACENET prescription drug assistance programs for older adults remain eligible even if their Social Security cost-of-living adjustments (COLAs) push them over the financial eligibility threshold. A COLA moratorium, which was set to expire at the end of last year, was extended through the end of 2025. The bill’s supporters argued that more than 20,000 older adults would have lost their benefits without the extension.  

Finally, Wisconsin expanded the number of drugs eligible for 100-day supplies for people enrolled in its SeniorCare program. The program previously limited 100-day supplies to certain maintenance drugs, with other drugs only available for up to a 34-day supply. The state also dropped the price of some 100-day SeniorCare prescriptions to a 30-day copay, once a deductible is met. 

Making headway in 2024

Progress is still in motion, Bartholomew says, pointing to prescription drug affordability legislation moving forward in Rhode Island. Also, Oregon recently passed AARP-backed legislation that caps copays for insulin at $35 a month or $105 for a 90-day supply, and New York removed all copays on insulin for people in state-regulated health plans.

What’s more, New Mexico and Virginia both passed laws to increase prescription drug price transparency. And plenty of other states are working on similar efforts. “It's still an active front,” Bartholomew says.