Flipping the Script in Connecticut

By: David Ostrowsky

On the prescription drug front, the recent launch of TrumpRx has been all the rage on the federal level, but not to be overlooked, there have been some fascinating state-specific developments worth examining.

In Connecticut, a new law went into effect on January 1—one that is the first of its kind in America—that prohibits manufacturers and wholesale distributors of generic drugs from hiking prices above the annual rate of inflation. Subsequently, for the over 400 generic and off-patent prescription drugs covered here, drug distributors that set prices in excess of this so-called cap could incur steep fines up to 80 percent of the profits earned by the price increase. The bipartisan measure, proposed by Governor Ned Lamont, focuses on generic drugs that were once much cheaper than brand-name medications but have recently experienced drastic price spikes. And next month the Department of Revenue Services will publish a report exposing the violators.

According to fiscal projections from the Connecticut Office of Health Strategy, healthcare consumers in the Nutmeg State could save over $10 million in 2026 alone. For a state where poverty is rampant among its most highly-populated cities (Hartford, New Haven, Bridgeport) and one in which, according to the United Way of Connecticut, there were approximately 581,000 households that couldn’t afford a basic “survival” budget in 2023, the downstream effects of this new legislation could be life-changing.

“Now Connecticut has the strongest pro-consumer drug affordability law in the country. It is going to make a real difference,” sponsor of the law, state Senator Matt Lesser (D-Middletown), said at a recent briefing at the State Capitol.

“It doesn’t matter what kind of insurance you have,” AARP State Director Nora Duncan added. “Whether you’re Medicaid, whether you’re self-insured, whether you’re Connecticut regulated, it’s going to help everyone.”

But like all healthcare policy matters, this one has its fair share of detractors as well as supporters. In fact, some pharmaceutical industry stakeholders have expressed concern that the new legislation could hinder research and development of future drugs if companies take a big hit financially. Among the Connecticut state-level politicians who have expressed skepticism, State Representative Tracy Marra, who serves Connecticut’s 141st Assembly District, has publicly opined that the law could send a very discouraging message to pharma companies. Meanwhile, there have also been calls for Connecticut policymakers to focus more of their efforts on the practices of Pharmacy Benefit Managers (PBMs), the industry middlemen who are ostensibly responsible for negotiating lower drug prices.

Nevertheless, this novel legislation promises to offer significant relief for the hundreds of thousands of cash-strapped Connecticut residents, who find that prescription drug costs have escalated well beyond their means. And, of course, the senior population continues to bear the brunt of the burden: A survey conducted last year by AARP found that virtually all adults age 50 and older (96%) believe the government should be doing more to reduce prescription drug prices. Seems safe to say that this Connecticut law is a prime example of the government “doing more.”

Looking ahead, it will be interesting to see if any other states follow Connecticut’s lead in applying inflation rates as a threshold for prices of prescription drugs. The legislation is not even two months old, and already Connecticut governor Ned Lamont is planning on conversing with other states’ governors about passing similar laws.

“In terms of pharmaceutical costs, I’ll be able to give this as an example of something we are doing, and we’ll see what other states want to follow us,” Lamont said.