States are exploring strategies to reduce healthcare costs, focusing on lowering spending in Medicaid, state employee health plans, and the commercial market. Prescription drug costs, which increased by 10.2 percent last year and are projected to rise further in 2025, are a key area of focus for state policymakers.
Lowering Prescription Drug Costs
The Trump Administration has announced new and proposed approaches to lower prescription drug costs, primarily targeting Medicare and Medicaid. States will have the option to participate in the Medicaid programs and may choose to comment on proposed Medicare rebate changes, potentially impacting state retiree health plan costs and offering opportunities to leverage federal price negotiations.
State officials are currently evaluating these federal programs to determine their relevance. The National Academy for State Health Policy (NASHP) is working with states to analyze the impact of federal efforts and develop specific strategies, such as updating existing model laws that benchmark drug prices to Medicare’s negotiated fair price or to international prices.
An example of such a model law is an act to reduce prescription drug costs using reference-based pricing.
Further details regarding these programs will be released in the coming months, and NASHP will continue to support states as they navigate these considerations.
Prescription drug costs increased last year by 10.2 percent.
State policymakers continue to develop and implement strategies aimed at lowering prescription drugs costs for their state residents.
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