A comprehensive New Hampshire law (2020 Ch. 13, HB 1280) sets price limits for insulin, requires coverage for certain prescription drugs, establishes a prescription drug affordability board to set pricing targets for public sector plans, creates a “competitive prescription drug marketplace,” and authorizes a wholesale importation program to purchase prescription drugs from Canada, subject to federal approval.
Beginning Sept. 1, 2020, the new law requires that health insurers that cover insulin limit individuals’ insulin costs to $30 per 30-day supply without applying a deductible. The cost limit must apply for the initial prescription and each refill, including early refills. Beginning Jan. 1, 2021, health insurers must provide each enrolled New Hampshire resident with coverage for epinephrine auto-injectors. The coverage can’t impose cost-sharing amounts higher than for other similar benefits. These mandates don’t apply to self-insured ERISA plans.
As the price of insulin skyrocketed, New Hampshire implemented restrictions for insured plans. In 2019, federal regulators, under IRS Notice 2019-45, added insulin to the list of preventive care benefits that high-deductible health plans (HDHPs) paired with health savings accounts (HSAs) can cover before enrollees have met the deductible, allowing for more cost-sharing restrictions. Insulin cost-sharing restrictions have been instituted in additional states as follows:
Beginning Nov. 1, 2020, the New Hampshire Prescription Affordability Board must annually report to state lawmakers strategies for optimizing prescription drug affordability for public plans that provide health coverage for state, county and municipal employees. The board also will set price targets and develop and implement policies and procedures for collecting, processing, storing and analyzing clinical, financial, quality restructuring and drug price data. Prescription drug manufacturers also must report to certain cost increase data and annually register with the board beginning Jan. 1, 2021.
Funding for the affordability board will come, in part, from assessments on health insurer premiums, third-party administrators, administrative services providers for health plan sponsors, prescription benefit managers, and drug manufacturers. The annual assessment amount will be determined by affordability board rules and will depend on the board’s expenses.
The legislation also authorizes the Department of Administrative Services (DAS) to establish the New Hampshire prescription drug competitive marketplace. The agency is charged with developing a dynamically competitive “reverse auction” process for selecting the state health plan’s pharmacy benefit managers (PBMs) through an automated, transparent bidding process conducted online. It will start with an opening round of bids and allows qualified PBM bidders to counteroffer a lower price for as many rounds of bidding as the DAS determines. After completing the first PBM reverse auction, DAS could open the process to self-insured private employers.
Following the Trump administration’s Safe Import Action plan and proposed regulations from the federal Food and Drug Administration (FDA), the New Hampshire law authorizes state regulators to work with the US Department of Health and Human Services (HHS) to design the structure and operation of a program to import drugs from Canada. The law calls for the state’s Department of Health and Human Services to organize the plan and submit a request for approval to HHS by Feb. 1, 2021.
The concept of importing drugs, long discussed by several states, has garnered renewed attention at the state level since the president announced his plan. In addition to New Hampshire, Florida, Vermont and Maine have moved forward on drug importation.
The most immediate impact of the New Hampshire law may be insulin cost-sharing restrictions. These caps might be welcome by patients, but likely mean the insurer will need to absorb costs that exceed the wholesale acquisition price and could pass that extra cost to employers purchasing insured healthcare for employees in New Hampshire. Additionally, any assessments the new board applies to health plans could raise premiums for insured plans and also may apply directly to third-party administrators and health carriers that provide administrative services only to plan sponsors.
The long-range intention is to reduce prescription drug prices for New Hampshire residents. However, drug importation proposals at the federal level have stalled as federal regulators focus on COVID-19 treatments and vaccine options. New Hampshire’s efforts to address prescription drug pricing in their state employee health plans may be instructive for testing different reforms, but it’s unclear whether the state’s new affordability board can successfully implement price targets without more systemic changes. Employers will want to continue monitoring federal actions that may signal additional options at the state level.