Course value based pricing12/19/2023 ![]() ![]() 7 Some have taken steps to make prescription drugs more affordable and improve access to expensive drugs, including innovative payment mechanisms such as subscription‐based models and contracts that tie financial rewards and favorable formulary placement to improved patient outcomes. ![]() In response, some states have begun experimenting with innovative policy approaches to address excessive drug prices. ![]() 6 In the face of cost overruns, state Medicaid programs, unlike other payers, cannot simply raise premiums or set prices. 5 Prescription drugs covered by Medicaid programs now represent 4.5% of all state budget expenses, up from 1.3% in 2008. In the absence of reforms at the federal level, state Medicaid budgets have strained under the pressure of expensive new drugs entering the market as well as older therapies. 4 Unlike most other industrialized nations, the United States lacks any mechanism to systematically constrain drug costs, with prices set by the manufacturer at whatever level it chooses. 2, 3 In public insurance programs like Medicaid, where patients are not directly exposed to high drug prices through out‐of‐pocket costs, high drug prices have been reported to place a substantial strain on budgets and limit other services that payers can cover.įederal legislation requires state Medicaid programs to cover essentially all FDA‐approved prescription drugs. 1 Coupled with a 29% absolute increase in the share of Americans with employer‐sponsored insurance on high‐deductible health plans from 2007 to 2017, many more patients are now vulnerable to these high prices, with higher out‐of‐pocket costs resulting in worse adherence and suboptimal clinical outcomes. N et prices for brand‐name prescription drugs in the United States rose by 60% from 2007 to 2018, faster than any other major component of health care costs, leading to increased spending on pharmaceuticals, intense pressures on health program budgets, and heightened motivation for policymakers to take substantive action. ![]()
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