'Smaller margins'

You know you're in trouble when the pharmacy worker catches your eye and lowers her voice: "You know how much this costs, right?"

That drug that works so well for your chronic condition is about to bust your budget - but do you really want to walk away and go back to being sick?

Tack on a half-dozen zeros to your CVS receipt and you'll get a sense of the sticker shock afflicting state officials, insurers and hospitals dealing with the soaring cost of prescription drugs in Connecticut.

"If things keep going the direction they are taking, it may really get very, very bad price-wise, cost-wise, for the hospitals," said Prudence Manirakiza, director of Pharmacy Business for Stamford Health. "We see the margins growing smaller and smaller."

Drug costs for hospitals in Connecticut rose at a higher rate in recent years compared to other Northeast states and have outpaced national averages, according to an analysis by Kaufmann Hall, a healthcare consulting company.

The Connecticut Hospital Association warns that higher drug costs - along with post-pandemic surges in labor and other expenses - are threatening the survival of the state's medical safety net.

"Financial challenges are a real and persistent challenge to the sustainability of Connecticut hospitals, the nearly 260,000 jobs they support, and the high level of care they provide that all patients deserve," association CEO Jennifer Jackson said in a statement late last year.

Lawmakers approve new drug price measures

The surge in drug costs for hospitals echoes similar price hikes for patients and Connecticut businesses that offer health insurance to their employees, said state Sen. Matt Lesser, D-Middletown. He co-leads a task force on prescription drug prices that reported on the issue earlier this year and helped shape a major new effort by state lawmakers to lower costs.

"This is the kind of action that my constituents have been saying they've been looking to us for for years, which is focused on pocketbook issues," Lesser said.

A package of a dozen new measures, signed by Gov. Ned Lamont on July 8, takes aim at prescription drug prices across a range of issues. The lawmakers' actions have also drawn national attention for first-in-the-nation efforts including exploring the making of Connecticut's own versions of premium-priced weight-loss drugs like Ozempic.

Lamont plans an official ceremony on Wednesday to highlight the newly approved package of a dozen new measures aimed at drug costs, which earned bipartisan support.

The new state laws include:

Pharmacy benefits managers: Imposes stricter regulation on managers like CVS's Caremark, which act as drug brokers for insurers and are blamed by patient advocates for raising drug prices.

Price caps: In a measure included in the text of the new budget for procedural reasons, the state caps the price of certain generic and name-brand drugs at the wholesale price, and can fine companies for exceeding the cap.

Discount cards: The cost of prescription drugs bought using discount cards like GoodRX and ArrayRX will now apply to insurance deductibles, resulting in lower annual costs for consumers.

Importing Canadian drugs: Connecticut's Department of Consumer Protection plans to study the feasibility of importing drugs from Canada at a lower cost, or at least linking prices to a Canadian benchmark.

Bulk pricing: Connecticut will expand its efforts to buy drugs in bulk, and explore partnering with other states to buy drugs for certain programs and agencies.

Making our own Ozempic: The state will study federal laws to explore the possibility of making our own versions of costly GLP-1 drugs like Ozempic and Wegovy, which are estimated to cost the state up to $400 million in future years for treatment of diabetes and obesity.

Cost concerns cross party lines

The growing impact high drug prices are having on Connecticut residents helped spur lawmakers from all parties to take joint action this year despite increased political polarization, Lesser said.

"People want more results and less bickering," Lesser said. "Here's an example of us working collaboratively to tackle cost-of-living issues in a way that's aggressive and and hopefully that will work."

The state's biopharma industry has opposed some of the new measures, saying they threaten a sector that supports thousands of high-paying jobs. Of particular interest to industry is the make-your-own-Ozempic measure.

"This is one of the most challenging policies to enable without unintended consequences, and it's crucial the state partner with key stakeholders," said Jodie Gillon, president and CEO of BioCT. "We need to balance patient access with protecting innovation in the U.S. and Connecticut specifically."

Although Connecticut's pharmaceutical companies oppose some of the new measures, the industry has been active on the bipartisan drug-price task force and supports new restrictions on pharmacy benefits managers, Lesser said.

"Rather than demonize any one particular group, we recognize that they all have a role to play," Lesser said. "We're asking them all to come to the table and help lower the cost of drugs."

States seek new sources of pricey drugs

Any action on making GLP-1 drugs in Connecticut is likely far in the future if it happens at all, said Claudio Gualtieri, senior policy advisor on health in the state Office of Policy and Management.

"There's a lot of federal hurdles and interpretation of certain federal laws that may be standing in our way," Gualtieri said.

What may be more promising in the near term is creating a nonprofit producer of drugs in the state to allow for direct purchasing, Gualtieri said, an idea that has been pioneered by health systems in California.

"We'll just collectively procure (a prescription drug), buy it at a very cheap, discounted price ... and then be able to spread those savings out across the insurance system," Gualtieri said.

Other ideas on the horizon to rein in drug prices include collaborating with other states on setting reference prices for drugs using Medicare as a benchmark, along with expanding the use of the state's own drug discount card, ArrayRX.

"I think turning all the great data and transparency that we have into an actionable outcome, I think that's going to be our focus," Gualtieri said.

State team quantifies drug-price hikes

Key to state transparency efforts on drug prices is the work of the Office of Health Strategy's Healthcare Benchmarks Initiative, which has been seeking to quantify drug price increases in detail. The teams' work has drawn the notice of lawmakers and sparked action, said program director Alex Reger.

Intensive and impartial data-gathering is needed on the impact of drug prices, according to Reger. "Healthcare, generally, but particularly prescription drugs, are a black box to almost everyone," he said.

The growth of vertically integrated health-care giants like CVS and UnitedHealth - in which one company may control the drug-maker, the pharmacy benefits manager, the pharmacy, the health insurer and even the doctor prescribing the drug - adds to the difficulty of gathering data, Reger said.

"There is no way to regulate or ensure the efficiency of a system which is not in any way transparent," Reger said.

In its most recent report, the Benchmarks Initiative found that per-person costs for prescription drugs jumped by 9.5% from 2022 to 2023 in Connecticut, the largest percentage increase of any health service.

Connecticut residents spent an average of $1,851 per person for prescription drugs in 2023, the report found, with no sign of a deceleration in prices in sight. Surges in usage of high-priced GLP-1 drugs like Mounjaro (up 795%) and Wegovy (492%) were blamed for the bulk of the increase.

Drug prices have been singled out as major drivers of rising health-care costs in data-gathering efforts and have serious real-world impacts on Connecticut residents and businesses, Reger said.

"A significant portion of state residents can't afford their medications, delay filling prescriptions, cut pills in half, and take extreme measures because of these costs," Reger said. "People struggle to pay medical bills (and) employers are also struggling to hire and grow because of the cost of paying for health insurance."

The benchmarking effort is key to another action that puts Connecticut on the cutting edge: a new measure that allows the state insurance commissioner to crack down on health insurers who exceed the state benchmarks for cost growth, and potentially ask for discounts on prescription drugs, Gualtieri said.

"We can unpack the prescription drug as part of the drivers ... figure out if there's interventions that the state should take to drive down those costs," Gualtieri said.

Hospital hunts down drugs as shortages drive up costs

At Stamford Health, one employee in purchasing spends her mornings online hunting down prescription drugs needed by the health system, contacting available suppliers and acting quickly to buy, said Sokhak So, director of pharmacy services.

"We're scrambling to purchase the medications, and we really don't want to stockpile that much unless it's really necessary for us to do that, because then it puts all the patients at risk and facilities at risk for not having access to these medications," So said.

Shortages have added to price pressures for hospitals because so few companies are making generic medications, which have relatively low profit margins, So said. Hurricanes, factory closures and outbreaks of swine flu have exacerbated shortages of widely used drugs like the anti-anxiety medication lorazepam, the blood thinner heparin and the saline solution needed for IV bags.

Soaring drug costs for hospitals "have escalated over recent years because of the drug shortages that we're experiencing," So said.

Drug shortages are another focus of Connecticut's new legislation, which creates a task force across state agencies to study how to address shortages as part of emergency preparedness.

As lawmakers gear up for the next session, Lesser said that Connecticut's latest actions on drug prices have attracted so much attention that they have led to a national road show: He's spoken at several national webinars and plans in-person visits to gatherings of health policy leaders in San Diego and Denver in coming months. Talking to other leaders is vital to form interstate coalitions that can pursue major efforts like bulk purchasing and importation from Canada, he said.

"The more states work together, the more we can make the math work and we can bulk up our negotiating clout," Lesser said. Both blue and red states are taking a more active role on drug pricing as the Trump administration steps away from direct measures to rein in costs, he added.

"It's really important, and other states are looking to Connecticut as a leader on this," Lesser said. "We've been sort of back in the pack for years on this, and as of this year, we catapulted to the front of it."