Wisconsin Democratic lawmakers introduced a sweeping legislative package this month with the aim of lowering prescription drug costs for consumers statewide.
Key elements of the initiative include efforts to invest in community-based healthcare and reigning in pharmaceutical industry practices which disproportionately harm low-income and underinsured Wisconsinites.
The “Less for Rx” plan seeks to cap insulin copayments at $50, eliminate BadgerCare copayments, establish a centralized prescription drug repository and create a new government agency to compete with insurance companies in negotiating prices--among other provisions.
Amid ballooning drug costs and minimal federal action on price tags set by the pharmaceutical industry, “Less for Rx” co-author Rep. Lisa Subeck (D-Madison) expressed hope her legislative agenda may empower consumers navigating a complex drug market.
“What you have is a system that is completely unpredictable and does not operate with the consumer at the forefront, and our goal with these bills is to put the consumer first,” Subeck said. “The person who is in need of life-saving or health-preserving medication should come first in this equation. ”
In generating their legislative agenda, “Less for Rx” authors placed a particular emphasis on reducing the price of insulin.
A vial of insulin can cost upwards of $300, putting the drug out of reach for thousands, particularly in communities of color.
In 2019, the Wisconsin Department of Health Services reported 13% of Black Americans living in Wisconsin did not have health insurance. Among Native Americans, the uninsured rate was greater than 9%, and nearly 9% of Latinos did not have health insurance. In comparison, just over 4% of white Wisconsinites did not have health insurance.
The existing racial gap in healthcare coverage proves eyebrow-raising when measured up against the disproportionately high rate of diabetes experienced by communities of color. Close to 15% of Native Americans, 12% of African Americans and over 12% of Latino Americans were diagnosed with diabetes nationwide.
Subeck described exploding prices of insulin–and the damage wrought onto underinsured communities most directly affected by diabetes–as core motivating factors behind “Less for Rx.”
“That’s why we proposed establishing a copay cap on insulin and why we propose creating an influence safety net program: to ensure that people never have to choose between whether they ration their insulin or whether they’re able to pay their other bills,” Subeck said. “I mean, those are things that we can tap into, at the state level that have almost an instant impact.”
“Less for Rx” is a culmination of a yearslong analytical effort conducted by the Governor’s Task Force on Reducing Prescription Drug Prices, established in 2019.
The task force, consisting of elected and appointed officials, businesspeople, community leaders and healthcare professionals, published a report in October 2020 outlining a series of recommendations for Evers to consider should he pursue a legislative agenda targeting prescription drug costs.
As Evers’ task force met, members took note of both the immediate financial strife befalling uninsured Wisconsinites looking to purchase insulin and the long term health implications of failing to properly treat an illness such as diabetes.
Task force member and Pharmacist in Charge at St. Vincent de Paul Yolanda Tolson-Eveans said the consequences of high insulin prices for underserved communities rapidly emerged as a top priority for herself and her colleagues after witnessing the adverse effects of diabetes on uninsured individuals.
“That [reducing insulin costs] was really one of the driving and focuses,” “Usually, when folks have diabetes, they have other diseases going on like blood pressure, high cholesterol and so on, but insulin is really one of the most costly aspects of care, especially for diabetes.”
The task force also voiced alarm regarding a perceived lack of oversight to protect 340B affiliated healthcare providers–a vital lifeline for underinsured communities–from predatory drug reimbursement practices.
340B is a federal initiative intended to reduce the cost of prescription medication for low-income Americans. Under 340B, pharmaceutical companies which participate in the Medicaid Drug Rebate Program are required to offer discounted outpatient drug prices to contracted healthcare providers, many of whom serve uninsured or low income populations–many of them communities of color.
Organizations, known as covered entities, which may qualify for a 340B designation include cancer hospitals, children’s hospitals, sole community hospitals, disproportionate share hospitals (DSHs), rural referral centers and critical access hospitals (CAHs). In order to enroll, healthcare providers must be either government-owned or a non-profit organization on a government contract to care for low-income individuals.
In Wisconsin, covered entities account for nearly 1600 healthcare providers across the state, including 119 in Madison and 262 in Milwaukee.
Urban areas are far from the only communities which stand to benefit from 340B covered entities. Subeck said rural communities throughout the Badger State rely heavily on CAHs in particular to provide care.
“These examples [of CAHs], they are largely in more rural communities where you don’t have a full scale hospital, but you have a critical access hospital where the scope may be a little more limited,” Subeck said. “It’s not like going to UW hospital or Merriter, but they provide critical emergency care in areas that don’t have full scale hospitals.”
In theory, Subeck said 340B was established with the aim of providing covered entities with the means to expand their services and invest resources into their clientele which may have otherwise been allocated toward purchasing outpatient medication.
In recent years, however, largely unregulated third-party entities began offering lower drug reimbursement rates to covered entities than their non-affiliated counterparts, indirectly shortchanging 340B patients.
Pharmacy benefit managers (PMBs) serve as intermediaries between insurers, drug manufacturers and the organizations which ultimately acquire drugs from a company. PBMs negotiate prices for prescription medication with drug producing companies and subsequently work to set reimbursement rates for covered entities purchasing medicine.
According to the Health Resource and Services Administration (HRSA), six drug companies violated 340B price regulations through negotiating noncompliant reimbursement rates to covered entities, yet the current laissez-faire approach to PBMs in Wisconsin provides government officials with little wiggle room to determine the extent to which these individuals play a role in setting low reimbursement rates.
Failures to comply with 340B laws prompted Evers’ task force to recommend a series of broad regulatory measures aimed at limiting the role of drug companies in negotiating reimbursement rates and expanding oversight of PBMs.
Wisconsin Office of the Commissioner of Insurance (OCI) Deputy Commissioner, Nathan Houdek, who chaired the Governor’s Task Force on Reducing Prescription Drug Prices said his agency often found itself unable to clearly determine at what point in the negotiating process the list price of a drug and the reimbursement rate offered to a covered entity diverged.
“One thing we realized through our work with the task force is there’s such a lack of transparency within the prescription drug supply chain,” Houdek said. “So, it’s hard to know what some of those practices are that might be contributing to increasing the cost of prescription drugs, and we’re very pleased that Wisconsin became the most recent state to pass a law that will actually give us at OCI regulatory oversight so that we can hopefully have a better understanding of some of these business practices that might be contributing to excessive prescription drug prices.”
Earlier this year, Evers signed 2021 Wisconsin Act 9 into law. Act 9 required PBMs to provide notice if the price or benefit tier of a drug fluctuates, submit an annual report detailing contracts held with Wisconsin pharmacies and obtain a license from the OCI to conduct business in the state.
Several bills introduced as part of the “Less for Rx” package seek to build on Act 9 regulatory measures, including creating a drug affordability review board, banning PBMs from offering a lower reimbursement rate to covered entities and mandating PBMs disclose the amount of money they retain from a drug company.
PBMs are not unique in requiring greater surveillance in the eyes of “Less for Rx” authors. The plan also seeks to expand licensure and registration requirements to pharmacy service administrative organizations (PSAOs) and pharmaceutical representatives–both of whom connect pharmacies and healthcare providers to drug companies.
Due to their cryptic business practices and recent emergence in the healthcare market, Houdek said PSAOs pose a particular challenge for agencies such as the OCI and expressed excitement at the possibility of attaining greater supervision over these groups.
“With regard to PSAOs, that’s a newer entity that we here in Wisconsin, as well as other states, are really just beginning to learn about and understand their role within the prescription drug supply chain,” Houdek said. “Having regulatory oversight and requiring licensure of PSAOs would allow us to better understand the business practices and address any issues that might be harming consumers and leading to access to prescription drug prices.”
Yet, the provisions of “Less for Rx” are not limited to 340B affiliates. In conjunction with shoring up even reimbursement rates for covered entities, the legislative proposal seeks to boost funding for free and charitable clinics to $4 million over the next two years.
The additional funding for no-cost clinics came as welcome news to Tolson-Eveans, whose charitable pharmacy provides free prescription drugs to uninsured residents for Madison living below the poverty line.
Tolson-Eveans said additional funding for organizations such as her’s will allow charitable healthcare providers to broaden their operations and acquire a higher volume of medication to dispense free of charge.
“We are safety net providers.” Tolson-Eveans said. “We’re taking care of folks that don’t have any insurance, and we don’t get any assistance from the government truly to do the work that we do. We really rely on private donors. The support of the state will allow for us to really take care of people, and we can prevent folks from ending up in the hospital by being able to provide them with medications that they could not otherwise afford.”
The path forward for “Less for Rx” in the State Capitol remains uncertain. Wisconsin’s bitterly divided and Republican-controlled state legislature all but guarantees a show-down over the ambitious healthcare reform package.
Evers attempted to wrap many elements of “Less for Rx” into this year’s budget, but was prevented from doing so by the state GOP.
Despite the potential for a partisan battle, Subeck said she remains hopeful she may attract some level of bipartisan support for her plan, citing the broad and ideologically diverse range of Wisconsinites impacted by skyrocketing drug prices.
“I am really hopeful that we will garner some Republican support for some of these proposals,” Subeck said. “I think that when it comes to lowering prescription drug costs, each and every one of us–whether we’re Republicans or Democrats–hear about this from our constituents. This is an issue that impacts our constituents, Republican and Democrat.”