Six ways lawmakers are trying to stabilize the Affordable Care Act, reduce drug costs
As the Trump administration's efforts to address high prescription drug costs and put the Affordable Care Act on the chopping block have languished, Nevada’s Democratic-controlled Legislature is taking health care into its own hands this session. Lawmakers heard six bills on Wednesday that would have significant implications for the way health care is provided in the state.
Under the crunched timeline of the 120-day session, two of the most ambitious policy proposals lawmakers heard were ultimately scaled back into mandates that lawmakers study the issues before the next legislative session. Those include requiring the state to establish a program to stabilize premiums for health insurance plans sold on the individual market and requiring rebates negotiated on prescription drug costs be passed along directly to consumers.
Other, more narrow proposals to restrict certain types of health plans and expand a drug transparency bill that passed two years ago appear likely to move forward as written.
Here’s a look at the health-care bills lawmakers heard on Wednesday:
Reining in high drug costs
The most overarching policy proposal focusing on prescription drug costs moving forward this session is state Sen. Yvanna Cancela’s SB378, heard by the Senate Health and Human Services Committee. The bill would establish a statewide Prescription Drug Affordability Board tasked with identifying certain prescription drugs whose prices create affordability challenges for insurers and patients. It also would create a Silver State Scripts purchasing coalition to negotiate drug rebates for Medicaid, state and local government health plans and other nonprofit health plans.
The five-member drug affordability board, in conjunction with a Prescription Drug Affordability Stakeholder Council, would be charged with reviewing the costs of certain drugs and creating an upper payment limit for purchases of the drugs in the state. Drugs would be subject to review if their cost per year or per treatment is $30,000 for a new drug, $3,000 more than a drug’s cost the previous year or $100 or more for a 30-day or less supply of a generic drug, among other criteria.
Although the initial recommendations by the board wouldn’t be binding, the limits would be mandatory for drug companies after 2024.
To pay for the board, the bill proposes an annual assessment on drug manufacturers that’s based, in part, on their sales. Because of that assessment, the bill will require a two-thirds majority vote to pass.
The legislation is modeled off of similar legislation working its way through the Maryland legislature, though that bill was recently scaled back to only apply limits to what state and local governments can charge.
Representatives of the Pharmaceutical Research and Manufacturers of America (PhRMA), the national drug lobbying organization, testified in opposition to the legislation, arguing that it appears to violate the U.S. Constitution and federal law.
Cancela described the legislation as “potentially groundbreaking” given the effect it could have on drug costs paid by patients, but said that she would work to ensure that the legislation “treads carefully not only on our budget but in any legal context.”
The legislation would also create a Silver State Scripts purchasing coalition, something proposed by Gov. Steve Sisolak during his 2018 campaign, to leverage the buying power of Medicaid and any state and local government health plans or nonprofit organization plans to negotiate lower drug prices.
PBMs and asthma drug pricing transparency
Another bill presented by Cancela on Wednesday to the Senate Commerce and Labor Committee would require the middlemen in the drug pricing process, known as pharmacy benefit managers or PBMs, to pass along all rebates on drug prices they negotiate between insurance companies and pharmaceutical manufacturers to the consumer. During a hearing, Cancela said the bill, SB276, is “a bit ahead of its time” — a parallel rule change proposed by the U.S. Department of Health and Human Services is still wending its way through the federal rulemaking process — “but it merits discussion.”
“The reality is that the easiest way to reduce the cost of prescription drugs for patients is for drug manufacturers to start by reducing their prices, in my opinion, but without pressure or policy that won't happen,” Cancela said. “So this bill allows for rebates to be removed from the drug payment system and moves PBMs to reimburse through transparent administrative fees.”
Drug companies, which have long pointed their fingers at PBMs in the debate over who is to blame for rising costs of prescription drugs, praised the legislation during the hearing. PhRMA lobbyist Rocky Finseth said the legislation “helps patients ultimately” and lauded Cancela for bringing it forward.
But the trade association representing PBMs, several union health plans and the state public benefits agency said that nearly all rebates negotiated by PBMs are passed along to insurance companies to reduce premiums. They also raised concerns that the legislation could unintentionally drive up insurance costs for patients.
Daymon Haycock, executive officer of the state’s Public Employee Benefits Program, testified that 100 percent of drug rebates collected, about $11 million for the insurance plan year, go directly toward lowering premiums for state employees.
“We don’t keep any piece or cut for ourselves. We definitely don't make a profit as a government entity,” Haycock said. “This is a huge concern for us.”
Cancela said she plans to bring forward an amendment that would ask the Legislature to instead study the feasibility of such a proposal during the interim between legislative sessions.
A third bill honing in on issues with access to prescription drugs, SB369, would prevent PBMs and pharmaceutical manufacturers from increasing prescription drug costs during a patient’s plan year. Sen. Julia Ratti, who presented the bill as chair of the Senate Health and Human Services Committee, also said she plans to prevent those drugs from being removed from an insurance company’s formulary — or list of covered drugs — during a plan year.
“There's an advocate I work with who specifically has multiple sclerosis. Every year during the open enrollment period she is specifically shopping her plan to make sure that she is on the plan that has her drug and that's the best price on that drug,” Ratti said, “and when in the middle of a plan year that drug price changes, that is, I believe, unfair to that end consumer.”
The drug companies testified in opposition to the bill, though industry lobbyist Finseth said that the organization will continue to work with Cancela, while the PBMs expressed concern about not being able to make formulary changes during a plan year. Sometimes a name-brand drug will be moved to a higher tier on a formulary when a generic version is developed, which PBMs say helps lower costs across the board.
Cancela also presented a bill, SB262, that would expand her diabetes drug transparency legislation from the 2017 session — requiring manufacturers of essential diabetes drugs and the PBMs involved in negotiating their prices to submit certain information to the state about the costs of producing the drugs and the profits made off of them — to cover essential asthma drugs, too.
More than a dozen members of the Culinary Union, which along with its health fund was a driving force behind the 2017 legislation, turned out to support passage of the new bill. The Nevada Conservation League and the Nevada AFL-CIO also supported it. PhRMA, which sued over the bill two years ago, testified in opposition to the bill, but asked that if the legislation does move forward that the same protections the state adopted in regulation to shield their data from public disclosure be codified in statute so they apply to asthma drugs, too.
Stabilizing the Affordable Care Act
Lawmakers are also turning an eye this session to another issue of significant interest for the Trump administration — the Affordable Care Act. The president, in a series of recent tweets, declared that Republicans will become “The Party of Healthcare” and said they are in the process of developing a plan that would replace the federal health-care law.
In the last two years, the Trump administration has taken a number of steps to undermine the Affordable Care Act, from declining to defend the constitutionality of the law in court to expanding the availability of non-ACA compliant plans, including association health plans and short-term limited duration plans through a federal rule change.
That’s why the Senate Health and Human Services Committee is sponsoring two bills this session that would add more restrictions on non-ACA compliant plans and direct the state to explore solutions to stabilize the exchange.
One of the bills, SB481, would place additional restrictions on association health plans, a type of group health insurance plan offered by an association to their members that the Trump administration expanded access to through a rule change last year. Since then, several chambers of commerce have established association health plans in Nevada, though a recent court decision has put the future of those plans in jeopardy.
This bill, pending an appeal of the court’s decision, would require that most association health plans be fully insured, meaning that they offer plans in conjunction with a health insurance company responsible for paying patient claims. Only health arrangements that have existed continuously for 10 years or are sponsored by an association that has existed for more than 25 years would be able to run a self-insured plan, those where the association is responsible for paying out insurance claims.
Insurance Commissioner Barbara Richardson said the goal of the bill isn’t to touch the existing chamber of commerce plans, which are fully insured, but to prevent fraudulent or insolvent self-insured plans from offering insurance to Nevadans.
“There's been one taken down by the FBI in Michigan and there's another one in California, the American Trade Alliance,” Richardson said. “So that's what we're trying to steer clear of is those organizations that come quickly and leave quickly.”
Several associations, including the Las Vegas Metro Chamber of Commerce and Associated Builders and Contractors, testified in opposition to the bill but said they would support it with additional clarification that the limitations wouldn’t be placed on fully-insured association health plans.
The legislation would also limit how often Nevadans can purchase short-term limited duration plans, a type of stop-gap insurance intended to cover someone between jobs or another brief period without health insurance coverage. The Trump administration increased access to short-term plans last year by extending their maximum duration from three months to 12 months and allowing insurers to renew or extend the plan to up to 36 months.
This bill would codify in statute a regulation limiting the length a short-term plan can run to 185 days and restrict Nevadans to purchasing only one short-term plan in a 365-day period, mitigating a concern from state officials that Nevadans could purchase several back-to-back short-term plans under the belief that they were receiving full insurance coverage. The bill would also limit the ability of insurance companies to cancel short-term plans when someone gets sick by specifying the limited circumstances under which a plan can be canceled.
Another portion of the bill would require all companies that offer individual health insurance plans to offer plans on the state’s health insurance exchange. Hometown Health, an insurer that only sells off-exchange plans in the individual market, said the bill would increase its rates between 7 percent and 15 percent.
“What I want to clarify is that all of our health plans that are offered in the individual small group market have all of the essential health benefits, have all the protections that are required. The only thing that doesn't happen is there is no subsidy for those who are off exchange,” said Jon Hager, director of planning and performance for Hometown Health. “Our rates will increase probably between 7 and 15 percent if you require that we be on the exchange.”
A final change would allow Nevadans to purchase health insurance plans in a geographic region in which they do not live.
A second ACA-stabilization bill, SB482, originally proposed to create a state-run reinsurance program to reduce premiums on the individual market by reducing the risk that insurers assume for high-cost claims. But a recent study conducted for the Division of Insurance determined that doing so would’ve required the state to invest $26.9 million for a roughly 12.2 percent reduction in premium costs.
Instead, the legislation would direct the insurance division to apply for a federal innovation waiver to allow the state to explore other options to stabilize the individual health insurance market. It would also allow Nevadans to purchase health insurance in other states under certain circumstances.