‘Perverse regulations’ from health law raising drug costs, study finds

The expansion of prescription drug coverage under President Obama’s sweeping healthcare law has led to a glut of “perverse” state and federal regulations that will increase the cost of medication, according to a new study.

The National Center for Policy Analysis (NCPA), a conservative-leaning think tank, argues that Americans, who on average fill a dozen prescriptions a year, would benefit from free competition.


“Drug coverage is expanding rapidly and heightened regulatory scrutiny will prevent drug plans managers from holding down costs for consumers with programs such as creating exclusive networks and encouraging mail-order prescriptions,” Devon Herrick, a senior fellow at NCPA, said in a press release.

The Affordable Care Act, which is taking effect, is increasing health insurance and Medicaid coverage around the country. But the study argues that the many new regulations, often enacted in the name of protecting consumers, are having the opposite effect, placing barriers to efficiency. 

Rules relating to the structure of pharmacy networks and the accepted formulas drugmakers can use have placed unnecessary burdens on the healthcare industry, the study concludes. 

Regulations barring drug plans from offering lower copayments for mail-order service may help community pharmacies, but they drive up costs for consumers, according to the report.

Further, state-mandated dispensing fees under Medicaid plans vary wildly, adding to the price of medication. For example, the study found that New Hampshire charges $1.75 for counting tablets, filling bottles and the administrative duties that go with processing a prescription. Alabama charges $10.64 for the same service. 

“The goal of policymakers should be to allow competitive bidding among drug plan stakeholders in an environment free of perverse regulations that unduly advantage one party over another,” the report says.