Blog -- the Clearinghouse for the Future of Pharmacy Benefits

Good vs. Bad Regulation

There are times when enhanced government regulation in health care is desperately needed to protect the public and to restore trust and confidence in certain parts of the system.  The recent, tragic case of a Massachusetts compounding pharmacy effectively acting like a drug manufacturer – but without adequate safeguards — and distributing contaminated drugs that  killed at least 650 people in 19 states is a prime example.   While this case will certainly wind its way through the judicial system and pertinent facts will emerge, most observers agree that both state and federal laws either failed to be enforced or were insufficient to protect the public. 

Yet, other times health care regulation is a barrier to making health care goods or services more affordable, including prescription drugs.   A new study prepared by the National Center for Policy Analysis confirms that certain state laws are undermining the ability of health insurance plans, pharmacy benefit managers, and Medicaid to make prescription drugs more cost-effective and available.   According to the report, state Medicaid programs are paying higher-than-average dispensing fees and some states are preventing health plans from utilizing proven cost-containment tools such as preferred pharmacy networks and mail-service pharmacies.  By the way, as we have reported previously, Medicare as well is not immune from regulations that drive up the cost of prescription drugs without any corresponding benefit.   We have seen the drugstore lobby advocate for these proposals from coast to coast, but whose interests are they serving?

These questions are especially important as up to 30 million Americans prepare for new coverage through the Affordable Care Act (ACA).   One of the greatest challenges facing successful implementation of the ACA (and every other part of health care, for that matter) is how to balance affordability, cost, and access.  A recent rule released by the Administration confirms that pharmacy benefits for individuals with coverage through new marketplace plans fails to mimic proven tools and techniques from the commercial market and may prove much more costly than anticipated.  If coverage in new health insurance marketplaces proves too costly and premiums escalate, federal subsidies inevitably will have to rise and many individuals may forego coverage until they know they need it, thereby further exacerbating cost increases.