Plan to cut prescription prices in Nevada would backfire
Nevada lawmakers are pushing forward with a bill designed to cut prescription drug costs — a goal that virtually every Silver State resident supports. Unfortunately, the bill would inadvertently make it harder for Nevadans to obtain many vital medicines — and fail to meaningfully lower the out-of-pocket costs that patients pay at the pharmacy.
Assembly Bill 250 would establish price controls in Nevada based on cost caps on certain drugs set by the federal Medicare maximum fair price (MFP) as negotiated under the Inflation Reduction Act. This limits the amount commercial insurance plans and pharmacies pay for prescription medicines. That may sound like a good way to reduce drug costs. In reality, however, it would have catastrophic consequences for patients in Nevada.
If Nevada were to set prices at the MFP level, it could prevent patients from accessing medicines. That's because the MFP may be less than many pharmacies or health care providers pay for certain drugs. Rather than losing money by stocking the medications, many drugs could be unavailable to patients who need them.
Pharmacies and hospitals may also face financial challenges if they purchase medications before the implementation of price controls and cannot receive reimbursement that covers their costs. Consequently, the threat of this bill passing may result in a shortage of many medicines in Nevada.
More than 31,000 people are living with epilepsy in Nevada. Most rely on innovative seizure medicines that can mean the difference between life and death. Many of those drugs may be difficult or even impossible to find in Nevada if AB250 passes.
And it's not just Nevadans living with epilepsy who could be harmed by this legislation. Not only might the supply of existing drugs dry up due to AB250, but as more states adopt flawed price control policies, fewer new cures will be developed. That's because price caps would make it nearly impossible for biotech and pharmaceutical companies to recoup the billions of dollars required to bring new medicines to market. With little hope of earning a profit on their inventions, drugmakers may abandon much of their research and development spending. This means life-saving medicines will go undiscovered, and some patients will pay the ultimate price for this bad public policy.
The legislation also fails to include helpful policies passed in recent federal prescription drug price laws.
For example, at the federal level, the Inflation Reduction Act capped insulin costs for Medicare beneficiaries at $35. It also overhauled Medicare Part D to cap beneficiaries' out-of-pocket prescription expenses at $2,000 a year.
AB250 would do little to lower costs for patients. As the bill is written, insurance companies, pharmacies and health care providers may pay less for some drugs, but the savings are not required to be passed to patients. As a result, a few big companies might pocket some extra money, but struggling patients likely wouldn't see much relief.
The Nevada Legislature should instead focus on real solutions that will actually lower the price we pay for prescriptions at the pharmacy counter. State lawmakers should start by working to make monthly drug costs more predictable. Additionally, they should require savings from negotiating drug prices to be passed along to patients rather than being pocketed by middlemen, insurance companies and retailers.
Nevadans certainly need help with high health care costs. But details matter; good intentions alone aren't sufficient. Lawmakers would be wise to focus on limiting patients' out-of-pocket expenses, rather than pursuing price control schemes that benefit insurers while restricting patients' access to critical medications.
Rod Hamson serves as the executive director of the Epilepsy Foundation for Nevada and Utah. He has spent more than 20 years working in the nonprofit community.