NCPA - National Center for Policy Analysis

New England States Attack Drug Prices

December 17, 1999

Politicians and policy analysts from four New England states -- Maine, Massachusetts, New Hampshire and Vermont -- are considering joint strategies to lower the price of prescription drugs. Options include local price controls and pooling their residents to demand a regional discount.

The states are frustrated at Congress's lack of action in controlling drug prices. However, observers say they could run into problems trying to expand their ideas.

  • A Maine commission recently decided against pooling as too cumbersome, and a bulk-buying plan in Massachusetts has raised a heated debate.
  • Arranging a region-wide compact could take years to implement, and would require congressional approval as well as agreement among the states.
  • Price controls have a negative impact on pharmaceutical research because, as an industry spokesman says, private investors can earn a higher return on their money if it's invested in other industries.

The group's brainstorming session also ran into other roadblocks to autonomous regional action. They are not allowed to re-import drugs from Canada (where they are cheaper). They can't get the steep discount the federal government gets, or buy through Indian tribes, who share the discount. And they also could not, under federal law, impose price restrictions on out-of-state manufacturers.

Source: Carey Goldberg, "New England Lawmakers Consider Drug Strategies," New York Times, December 17, 1999.

 

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