Murphy and lawmakers unveil plan to cap some drug prices

New Jersey will cap the prices of insulin, asthma inhalers and devices like EpiPens in an effort to slow the steady rise in drug prices, Gov. Phil Murphy announced Monday alongside a group of legislators.

“Through these efforts, we will join the growing number of states saying ‘enough is enough’ when it comes to rising drug costs by taking a long look under the hood of the whole process, and then fixing what needs to be fixed,” Murphy told the Willingboro Township Senior Center.

The governor’s proposal includes a measure that would place a cap on certain out-of-pocket expenses for residents enrolled in a state-regulated health care plan or certain public-sector insurance programs. The direct costs of a month’s supply of insulin would be capped at $35 for consumers. The cost of an EpiPen would be set at a maximum of $25 and asthma inhalers would cost a maximum of $50.

A Kaiser Family Foundation October 2021 Poll found that 26% of American adults struggled to afford the medications they had been prescribed, and 29% said they replaced their prescription with an over-the-counter medication, cut pills in half, skipped doses, or never had not filled a prescription to reduce costs.

“In the wealthiest nation in the world, and one of the wealthiest states in that nation, we should never have that Hobson’s choice to choose between our medicine and our food or our rent or any of our expenses,” said Sen. Troy Singleton (D-Burlington). “Nobody should go to hospice because they got sick, and it’s our obligation as policy makers to do something about that.”

Price controls will not affect all New Jersey policyholders. Many employers manage their own health plans. These self-insured plans leave more risk to the employer, but are subject to less stringent regulation than fully insured plans run by insurers.

The New Jersey Association of Health Plans, an insurance industry nonprofit, estimates that less than 20 percent of New Jersey residents were enrolled in a state-regulated plan. Price controls would extend to state employee health benefit plans and school employee health benefit plans, which cover public sector workers statewide.

In a separate proposal, Murphy called for greater scrutiny of drug benefit managers — who negotiate with drugmakers on behalf of insurance companies — and said his administration would seek to ban practices that drive up prices. medication.

The role of pharmacy benefit managers in driving up drug prices has received increasing attention from lawmakers and advocates in recent years. They are the subject of a separate bill which advanced to the Senate on Thursday.

Although these companies negotiate rebates and rebates on pharmaceutical list prices, it is not clear that the savings they achieve do much to reduce consumer out-of-pocket costs. A 2020 white paper by researchers at the University of Southern California found that average list prices increased by $1.17 for every $1 increase in discounts.

“These rebates are no longer going to go to profits. They’re going to go where they should — to the consumer, to us. Because otherwise it’s not sustainable,” said MP John McKeon (D-Essex), chairman of the Chamber’s Financial Institutions and Insurance Committee.

As part of the reforms, the state will create a new system to analyze drug prices along the supply chain, a practice that could allow it to spot high cost additions as pharmaceuticals move from manufacturers at the pharmacy counter.

Murphy’s fourth proposal would allow NJ FamilyCare, the state-funded health insurance program, to pool purchasing power with other states to negotiate lower drug prices.

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