By Oliver McPherson-Smith and Steve Pociask
Soaring prescription drug prices are putting financial pressure on families across the country. In response, state legislators are increasingly considering limits on the annual price increase of prescription drugs. But rather than making drugs more affordable, these policies risk reducing consumer access to cheaper, generic alternatives.
In an effort to slow the ongoing rise of prescription drug prices, lawmakers in Maryland created the country’s first state prescription drug affordability board in May of 2019. Among other powers, the board will be able to review and cap the price of generic prescription drugs if they increase by 200 percent or more for patients covered by public state insurance plans. The law also extends to any prescription drug whose price would create vague “affordability challenges” for the state health care system or its patients.
Following Maryland’s lead, lawmakers and bureaucrats in Hawaii, Colorado, and Connecticut are expected to consider creating their own drug affordability boards. In addition to affordability boards, some states are also pursuing “transparency” and “price gouging” legislation, which sound appealing and well-meaning, but do nothing to stimulate more competition in the marketplace.