Cost growth benchmarks in the CT budget; prescription drug price cap fails

An ambitious bill to cap annual increases in the cost of prescription drugs failed to gain traction in the Legislature this year, though lawmakers passed another Lamont administration plan to continue to set annual benchmarks for health expenditure.

For the second year in a row, a proposal to cap annual increases in the cost of prescription drugs at a rate of 2% plus inflation failed to pass the House or Senate. Under the measure, pharmaceutical companies that exceeded the cap would have been penalized.

The bill would also have authorized the state’s Department of Consumer Protection to oversee the importation of lower-cost drugs from Canada. A last-minute suggested change to the plan would have removed the price cap portion, but preserved the import program. However, he was not called to vote.

“It ran into headwinds,” Sen. Matthew Lesser, D-Middletown, said of the bill on Wednesday, hours before the General Assembly adjourned. “It’s hard to pass big prescription drug reforms because a lot of people are making a lot of money off of it. I would have loved to do that.”

Lawmakers have taken action on another bill aimed at reducing the cost of health care. A bill that would direct the state Office of Health Strategy to set annual benchmarks for health care cost growth was approved by the House and later tied to the state budget, which has passed by both Houses.

The proposal codifies into law an executive order by Governor Ned Lamont issued in January 2020, just months before the pandemic began. It requires the OHS to establish annual benchmarks for the rising cost of health care, and it requires providers, insurers and other industry players to report their annual price increases.

The order is a transparency measure designed to expose hospitals, doctors’ offices and insurance companies whose costs exceed state-imposed targets. There is no penalty for those who exceed the benchmarks, but Lamont said the annual reporting mandate would put public pressure on those agencies and companies to cut costs.

The initiative would also track annual primary care spending and set targets in this regard.

“Payment for health care is a black box. It’s really complicated and a lot of people don’t know what they’re paying for,” Lamont said Thursday. “Quality and cost differentiation is ubiquitous, something I don’t see in any other industry. … I like to think that employers are going to pay close attention to this benchmarking because they are building a platform that takes care of their employees best in terms of value, not just price.

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