ALBANY – The state will establish a new cost-control system to stop some “unconscionable” drug companies from gouging consumers with high prescription drug prices, Gov. Andrew M. Cuomo said Wednesday.
In his sixth -- and final -- State of the State address, Cuomo said he will propose in his upcoming budget the creation of a state review board to establish a “fair price” that New York will pay for individual prescription drugs in its Medicaid program.
That price would then also apply to sales in the private marketplace.
Cuomo said drug manufacturers will be required to pay a surcharge if they sell the drug to consumers at a price above the government-set level.
The Cuomo administration described a three-part effort:
A state board will create an effective ceiling on what Albany would pay for “certain” high cost prescription drugs dispensed to Medicaid participants. It will include everything from cancer and HIV drugs to EpiPens.
Secondly, drug companies will pay a surcharge if that ceiling price is exceeded for drugs sold to non-Medicaid consumers. The surcharge revenues will not be returned directly to consumers, but go to the state’s Department of Financial Services to be used exclusively for lowering premiums paid by people with private insurance plans. Officials said a federal court decision involving drug industry patents guided the decision to impose a surcharge on companies instead of imposing a direct price cap.
Finally, the plan seeks to place new state rules on pharmacy benefit management companies, which are third-party administrators of prescription drug plans run by various commercial and government insurance programs.
Priscilla VanderVeer, a spokeswoman at the drug industry trade group PhRMA, said Cuomo’s plan appears “similar to previous proposals that were soundly rejected by the Legislature.’’
She said breakthrough medicines are saving lives and reducing health costs but said insurers are imposing high drug deductibles and other out-of-pocket costs that are limiting access to drug therapies.
“Government mandates and interventions that do nothing to help patients access their medicines are not the solution,’’ she said.
The plan will not apply to every drug dispensed through Medicaid, but medications that are seeing price spikes, including generic and so-called emerging "specialty" drugs. The administration did not have a savings estimate for the Medicaid program.
Assembly Health Committee Chairman Richard Gottfried said he welcomes Cuomo joining his years of effort to get the state to negotiate drug prices for the entire Medicaid program. He said the present system has each Medicaid managed care plan negotiating its own drug price deals.
“The state has much more bargaining clout than any one plan,’’ the Manhattan Democrat said.
In a speech at the University at Albany, Cuomo also called on lawmakers to back a package of ethics and campaign finance changes.
Cuomo said the measures are needed to address corruption scandals that have hit not only the Legislature, but his executive branch – a reference to the federal prosecution of eight individuals, some with close ties to Cuomo, connected to upstate economic development programs, including the Buffalo Billion.
The proposals were the same he and legislative leaders were discussing for a December special session of the Legislature. Those talks fell apart.
The plans would include restricting outside income of lawmakers and making the Legislature a full-time body, closing certain loopholes in the campaign finance system, restricting donations by companies or individuals while they are seeking state procurement contracts, expanding the state Inspector General’s authority over the State University of New York, term limits for some elected officials, financial disclosure requirements for local officials and creating a Legislature-approved Inspector General’s office at the Department of Education.
“We need to improve the public trust,’’ Cuomo said.
The ideas Cuomo presented have been supported by government watchdog groups, although one organization, the New York Public Interest Research Group, said Cuomo was leaving out one of the most important changes needed in Albany: an independent agency to police ethics laws pertaining to state officials.
The current ethics agency is controlled by Cuomo.
The proposals all need approval by the state Legislature.
In a 383-page written message to the Legislature, Cuomo again proposed a plan to decriminalize possession of marijuana. Precise details were not available, but Cuomo in his message said he wants to reduce the number of cases of “nonviolent individuals who become needlessly entangled in the criminal justice system.”
The document said he will propose a bill to remove “the criminal penalties that too often result in the over-prosecution and jailing of nonviolent individuals” possessing marijuana. “This measure reflects a national trend and dramatic shift in public opinion.’’
Cuomo said New York will not follow other states that have legalized marijuana and will still prosecute illegal sales.
In explaining why he did six speeches this week instead of a single address before a joint session of the Legislature, a century-long tradition, Cuomo said he wanted to “break the model” with addresses to various regions.
With increasingly tense relations between the branches, lawmakers had talked of boycotting a traditional State of the State by Cuomo this year.
Including a week of roll-out presentations, Cuomo said he did eight presentations, including the six State of State addresses, in 10 days that were attended by 6,500 people.
In all, he said, he traveled 1,300 miles and turned to his favorite slide presentation vehicle – PowerPoint – 1,000 times. The speeches averaged nearly 45 minutes apiece.