Washington is getting drug pricing wrong — here’s how states can get it right

The Hill's op-ed introduces a strong case for state leadership in pharma policy.

Naomi Lopez is an adjunct scholar at the Mackinac Center for Public Policy, senior fellow at the Goldwater Institute, Public Advisor at Paragon Health Institute, founder and principal of Nexus Policy Consulting and the author of The Free Market Remedy for Drug Pricing Ills: A Toolkit for State Lawmakers.

https://thehill.com/opinion/healthcare/5812387-states-lead-pharmaceutical-reforms/

Washington is getting drug pricing wrong — here’s how states can get it right

Naomi Lopez     |     04/02/26

On drug pricing, few things are more dangerous than bipartisanship.

Democratic former President Joe Biden and Republican President Trump have both tried to lower the cost of prescription drugs. Yet Biden’s Inflation Reduction Act and Trump’s Most Favored Nation scheme both amount to de facto price caps. They inevitably stifle the future medical breakthroughs that Americans need by preventing pharmaceutical makers from getting a return on their multi-billion dollar investments.

The Inflation Reduction Act alone has already shelved at least 55 medical research projects and led companies to abandon at least 26 new medicines, hurting patients for generations to come.

If our country is going to cure cancer or end heart disease, we need smarter policies that both lower costs and encourage innovation. If D.C. won’t deliver that vision, then states must embrace a new leadership role.

In a new paper for the Mackinac Center, I lay out a comprehensive pharmaceutical agenda that states should pursue as quickly as possible. This agenda is grounded in the proven principle of competition, which can both save patients money and spark new breakthroughs. All told, I recommend dozens of concrete policy actions that states can take — actions that are far more effective than anything coming out of Washington.

First and foremost, I show how states can lower the cost of prescription drugs without stifling the development of future medications.

The most effective thing states can do is allow seamless “pharmacy transfers.” Patients typically struggle to transfer their prescriptions to the pharmacy of their choice because of state laws and regulations, although some states allow greater flexibility during declared emergencies. Yet some pharmacies offer significant price savings. For instance, I identified an Asthma medication that many pharmacies offer for the list price of just under $100. But others offer it for under $10, and some mail-based pharmacies offer 30-day supplies for less than $1. By allowing seamless pharmacy transfers, states will let patients switch to more affordable options, putting pressure on competitors to lower their prices, too.

States can also save patients (and taxpayers) money by requiring more use of generic and biosimilar drugs. When these products enter the market, they are proven to lower drug prices by as much as 85 percent. Yet manufacturers and pharmacy benefit managers often use legal tricks that keep patients on higher-priced drugs. States can ban these practices in state employee health plans and other taxpayer-supported programs so that patients can switch to more affordable generic drugs much sooner. They can also require pharmacists to substitute generic drugs for brand-name medications in these plans, unless expressly restricted by the prescribing medical provider, further lowering prices. Requiring price transparency for prescription drugs would further spark the competition that saves patients money.

But states shouldn’t stop at smarter efforts to lower costs. It is just as important — if not more so — to ensure America’s continued leadership in medical breakthroughs.

On that front, states should immediately outlaw the so-called “quality-adjusted life years” metric, where factors such as age, mobility and cognitive function measure the “value” of an individual’s life to determine coverage decisions. This is rationing and it discriminates against the sickest and oldest patients. They need the most medical help, but pharmaceutical companies may steer clear of developing innovative treatments for the most vulnerable populations if unelected, bureaucratic boards can decide that the treatments to improve or even save their lives just aren’t worth it.

Finally, states should immediately break the barriers that stand in the way of 21st century medical innovations. Recent advances in genomics, biomarkers and diagnostics have brought us to the cusp of therapies and treatments that are tailored to individual patients. But decades-old federal rules frequently bog down promising treatments in rules and red tape.

States can solve this problem by creating new pathways to get the right treatments to the right patients, and at the right time. Bottom line: 20th century thinking shouldn’t stifle 21st century progress.

These are just a few of the reforms that states can enact to lower costs, promote access and encourage medical breakthroughs. Unfortunately, Washington and many states are rushing in the opposite direction, supporting their own price controls and other restrictions that are touted to save money in the short run but kill medical progress and promising cures for those who need them most over the long haul. Competition — not government control — is the proven way to both save patients money and improve their lives.

Sadly, the bipartisan approaches we see in D.C. don’t achieve that. It’s time for states to show the way forward.