Marty Rosendale: Trump Administration Takes a Positive Step to Lower Drug Costs, but More Action Needed from the Maryland Legislature

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The rising costs of health care and patient out-of-pocket costs that jeopardize access to care for Maryland families have rightly been a major area of focus for policymakers at both the federal and state level.

The Department of Health and Human Services (HHS) recently issued a proposed rule that would help lower the cost of medications at the pharmacy counter and reduce patient out-of-pocket spending by reforming the drug rebate system. Under the current system, rebates are paid by drug manufacturers to little-known middlemen called pharmacy benefit managers (PBMs). Health insurers hire PBMs to administer prescription drug benefits, negotiate prices with manufacturers, and set rebates with pharmacies.

While PBMs were originally meant to lower costs for consumers, because they operate in a black box with little transparency, it is impossible to know if these cost reductions ever make their way to patients, or simply enrich PBMs. The Administration’s proposed rule aims to ensure that savings are passed on to patients to help defray their health care costs, not pad the pockets of PBMs. This is an important, positive step. More must be done, particularly at the state level, to help patients afford the care they need at the pharmacy counter.

Maryland has been a national leader in reducing costs in recent years by increasing transparency around PBMs and reforming egregious PBM practices. For example, some PBMs had inserted ‘gag clauses’ in their contracts with pharmacists, which prevented pharmacists from telling consumers when there were cheaper options available, such as paying out of pocket for their medication rather than going through insurance. Last year, Maryland helped lead an upswell of state-based opposition to these rules, passing legislation that banned gag clauses. The federal government soon followed the lead of Maryland and other states and passed a federal gag clause ban. While last year’s legislation was an important change to help patients, more work remains.

This legislative session, lawmakers in Annapolis will consider multiple additional proposals to further increase drug price transparency and help rein in costs. By better understanding the cost of care, patients and providers will be empowered to make more cost-effective decisions about their health care, without sacrificing quality. However, as lawmakers work to reduce costs, they must be cautious not to support misguided regulation or legislation that undercuts innovation and puts breakthrough cures and treatments out of reach for Maryland patients.

Right now, Maryland is home to some of the most innovative life sciences companies in the country, who flock to the state not only for its highly-educated and skilled workforce, but also for the welcoming innovative businesses environment. These companies are working every day to create life-saving treatments for diseases that were once a death sentence and help support not only patients but our state’s economy. Burdensome regulation not only risks harming these companies and preventing them from the breakthrough cures patients need, but it risks companies abandoning selling medication in Maryland altogether because doing so would be too expensive. The consequences of either can be measured in lives.

As Maryland lawmakers work to drive down health care costs for patients, they must be careful to do so in a way that grows the innovation economy, bolsters Maryland’s position as a nationwide life-sciences industry leader, and avoids unintended consequences that harm precisely the patients that legislators are seeking to help.

Marty Rosendale is the CEO of the Maryland Tech Council, a community of more than 450 industry-leading life science and technology organizations.

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