Michigan Dems aim to cut prescription drug costs with ‘affordability board’

• Michigan Senate OKs plan for new Prescription Drug Affordability Board
• Board would conduct cost reviews and could cap prices
• Eight other states have similar boards, but none have capped prices yet

LANSING — The Democratic-led Michigan Senate Wednesday threw its support behind Gov. Gretchen Whitmer’s attempt to rein in rising prescription drug prices. 

The Senate, in a vote along party lines, backed the creation of a Prescription Drug Affordability Board to review costs and potentially cap prices on drugs that create “affordability challenges” for health care providers or patients.

The board was one of the legislative priorities Whitmer, a Democrat, laid out in her Aug. 30 “what’s next” speech in Lansing. 

Related:

• Gov. Gretchen Whitmer: Michigan ‘uniquely impacted’ by UAW strike
• Michigan police agencies sweating enforcement of 'red flag' gun laws
• Michigan House Dems OK election access measures: What the bills would do

The five-member board would be similar to new boards in eight other states. It would not have authority to directly regulate pharmaceutical prices charged by drug manufacturers but would attempt to control drug costs by capping the prices paid by state-licensed companies such as pharmacies, hospitals and insurance companies. 

Drug affordability boards in other states have not yet led to cost reductions but advocates are hopeful that they will eventually lower prices for consumers. Maryland created the first such board in 2019.

"Every year prescription drug prices go one direction: higher," sponsoring Sen. Darrin Camilleri, D-Trenton said in a speech from the Senate floor Wednesday. “This is a crisis that is only getting worse. Our answer can't be to do nothing."

If approved by the House and signed into law, the legislation would create a "non-partisan" review process that would "help Michiganders take power back from big Pharma," Camilleri said. 

Republicans universally opposed the legislation, arguing that while prescription drug prices are a real problem for Michigan patients, the potential price controls could discourage manufacturers from selling life-saving drugs in the state.

“At best, this price fixing board will do absolutely nothing, like has happened in other states, said Senate Minority Leader Aric Nesbitt, R-Porter Township. “At worst, it could risk eliminating access to life-saving drugs for Michigan patients.” 

He called the legislation a "cut-and-paste job" from other states that "haven't seen any real savings for patients."

Across the country, states that have created review boards include Ohio, Minnesota and Colorado. Some state boards have completed affordability reviews but, as of May, none had actually established a payment cap on any prescription drugs, according to a Harvard Medical School review. 

Critics of these boards warn they could do more harm than good. 

“This bill does not address the root cause of the problems affecting patients, such as lowering out-of-pocket costs,” the Biotechnology Innovation Organization, an industry advocacy group based in Washington D.C., told a Senate committee reviewing the legislation last month. “Imposing government price controls like those proposed by this legislation will jeopardize patient access to innovative biopharmaceuticals.” 

It's unlikely that prescription drug manufacturers would actually stop selling their products in the state because of price caps, according to the Michigan Association of Health Plans, which is pushing the legislation in Lansing.

"Drugs are sold through many different wholesalers who do business across the country, making it difficult, if not impossible to restrict availability of the drug in Michigan," the association said in written committee testimony. 

"Manufacturers already sell the same drug to different stakeholders at many different negotiated discounts and rebates with a goal of remaining competitive and expanding their market share.”

Under the legislation advanced Wednesday, the new board would be appointed by the governor but subject to review by the Senate. It would work with a separate 14-member council of industry experts — including a drug manufacturer representative — and advocates for seniors, unions and other impacted groups.

The proposal would allow the state attorney general to sue people or companies who violate payment caps established by the board.

Prior to the vote, Senate Democrats unanimously backed an amendment from state Sen. Jim Runestad, R-White Lake, that would prevent new board members from lobbying officials during or up to five years after their tenure.

"We need a guarantee that these board members are putting Michigan first and not lobbyists," Runestad said. 

Democrats rejected other proposed GOP amendments, including a second offering by Runestad that sought to prohibit Whitmer or future governors from appointing political donors to the board. 

The legislation is the latest in a series of efforts by lawmakers across the country to reduce the rising cost of prescription drugs.

Nationally, the price of more than 1,200 prescription drugs increased faster than the rate of inflation between July 2021 and July 2022, with the average cost jumping 31.6 percent, according to a recent federal review. 

The federal government is beginning to negotiate Medicare drug prices under a law signed last year by President Joe Biden that also capped insulin copays at $35 a month for Medicare recipients with diabetes.

In Michigan, Whitmer last year signed bipartisan bills that aimed to reduce costs by increasing regulation of "pharmacy benefit managers.” She also directed government departments to study the possibility of creating an insulin manufacturing facility in the state. 

The proposed affordability board could increase costs for the state government, according to the non-partisan Senate Fiscal Agency. 

The agency projects board member salaries and expenses, combined with three full-time staffers and administrative costs, could total $5 million per year. And a one-time study of prescription drug costs could cost another $750,000.