Spending in the United States for prescription drugs has grown dramatically over the past decade, with Medicaid pharmacy costs increasing annually at double-digit rates. This trend is not abating; 2006 was the fourth consecutive year average prices of dozens of brand-name drugs widely used by elderly Americans increased more than twice the rate of inflation. NLARx is working with state legislators to reduce drugs prices by establishing cost management councils to facilitate cost-cutting strategies, creating legal mechanisms to address the unconscionable pricing of medicines, regulating price gouging, and setting a reference price as a baseline for negotiation. Other state initiatives include laws to disclose both wholesale and retail prices, and legal actions to address the manipulation of AWP pricing information and enforce Medicaid “Best Price” provisions. Some of these laws are being challenged in court by the drug industry, and NLARx is participating as an amicus to defend them.

Researching this Issue

Model laws and best practices, testimony supporting these initiatives, and background information and research materials on the pricing of prescription drugs, including reports, court decisions and news articles, are posted here. Other relevant materials may be found on the issue pages relating Medicaid & Medicare, which includes information on price manipulation lawsuits and the cost of government pharmacy benefits; Pharmacy Benefit Managers, which has information on the role of PBMs in drug pricing; and Discount Plans & Purchasing Pools, which has information on state programs to leverage better prices. The Pharma Watch page details drug industry tactics and spending related to drug prices, lobbying and marketing efforts. See also the Related Links below to connect to other organizations and materials relevant to this issue.