In 2024, 46 states and DC will convene a legislative session, with 41 kicking off sessions in January. As the federal government grapples with implementation of the Inflation Reduction Act (IRA) alongside coverage shifts from Medicaid redeterminations, states will likely want to make their own mark on prescription drug pricing and access in state-regulated insurance markets. At the same, given ongoing concerns with healthcare workforce challenges, artificial intelligence (AI), substance use disorders, and health inequities, state legislative sessions have a multitude of issues to cover. This Insight explores some of the high-priority healthcare issues likely to arise.

Prescription Drug Affordability Review Boards, Upper Payment Limits, and Reference Pricing

As federal implementation of the IRA unfolds in 2024, including the announcement of negotiated Medicare maximum fair prices (MFP), states are likely to continue to prioritize legislation to control drug spending. Leading approaches in recent years include the establishment of prescription drug affordability review boards (PDABs) with or without upper payment limits (UPLs), and reference pricing.

To date, 8 states have enacted PDABs with 5 having the authority to set UPLs. Colorado continues to be the furthest along in this process, conducting affordability review for 5 drugs in late 2023 and early 2024. Minnesota became the first state to enact a PDAB and UPL law that ties price thresholds in their state to Medicare’s MFPs in 2023. Policymakers are likely to continue to debate PDAB and UPL bills in 2024 as well as reference pricing bills that could seek to tie negotiated Medicare rates to state-regulated plans’ payments for the same products. These measures may have a significant effect on prescription drug pricing and coverage in the states where enacted, and potentially nationwide.

Patient Affordability and Access

Beyond drug pricing, state lawmakers have expressed concern both with individual out-of-pocket spending, and certain practices like prior authorization that can make healthcare more difficult to access. In recent years, patient groups have prioritized legislation to prohibit implementation of copay adjustment programs . These programs are applied by insurers and pharmacy benefit managers (PBMs) to prevent manufacturer copay assistance from counting toward a patient’s deductible and maximum out-of-pocket calculation. A 2023 district court ruling (HIV and Hepatitis Policy Institute v. US Department of Health and Human Services) sought to prevent accumulator use, however, the federal government’s appeal of the decision will lead to increased uncertainty into 2024.

The number of states with bans on copay adjustment programs has risen to 19 plus DC and Puerto Rico. The federal government has also attempted to address the issue of copay adjustment programs by introducing the Help Ensure Lower Patient (HELP) Copays Act  in the House. Given the regulatory uncertainty via district court ruling appeal and federal legislation movement, state legislators can be expected to continue debating copay adjustment programs in 2024.

Further, state lawmakers will likely continue to show legislative interest in expanding access and affordability for specific patient populations. This will likely include the uptake of copay or cost-sharing caps for products such as insulin and a renewed resurgence in tackling patient exceptions and appeals processes in utilization management (e.g., prior authorizations for serious mental illness).

Pharmacy Benefit Managers

Since the 2020 Supreme Court ruling on Rutledge v. PCMA that upheld the ability of states to regulate some pharmacy benefit manager (PBM) practices across plan types, including self-insured plans operating under the Employee Retirement Income Security Act (ERISA), state lawmakers have introduced hundreds of bills related to PBM regulation. Nearly 40 states have enacted legislation focused on PBMs or health insurance issuers in the last 2 years. Most recently, states have shifted efforts to legislation that targets how PBMs operate, such as:

• Requirements to pass on any rebates received to patients or plan sponsors
• Efforts to limit “spread pricing” (where the price PBMs give to a payer is larger than the price PBMs give to a pharmacy)
• Reimbursement of a non-affiliated or 340B pharmacy for the same amount that would be reimbursed to an affiliated pharmacy.

With PBM reform legislation yet to be enacted by the federal government, states can be expected to continue their focus on PBMs in 2024.

Increasing Coverage and Medicaid Redeterminations

As of November 2023, nearly 11 million Medicaid beneficiaries had been disenrolled from coverage under eligibility tied to the end of the COVID-19 public health emergency. These individuals could attain coverage elsewhere, including through open enrollment in state exchanges. State policymakers may seek legislative avenues to ensure their residents have continued access to coverage by making it easier to enroll in exchange plans, providing expanded coverage options (e.g., basic health plans), or insuring additional populations through public programs (e.g., expansion of coverage regardless of immigration status).

How Avalere Can Help

States are poised to drive impactful healthcare policy reforms in 2024 while the federal policy landscape is likely dominated by IRA implementation and election-year dynamics. Stakeholders should consider state opportunities and concerns and plan proactively for changes to the pricing, coverage, and access landscape resulting from state legislative action. To hear how Avalere’s policy experts and subscription products can support your state tracking, advocacy, and strategic planning efforts, connect with us.