State of play: BIO Coffee Chat covers how state policies impact access

“We’re finding that the most disruptive pieces of legislation are much more likely to advance in state legislatures first, before eventually gaining traction at the federal government level,” said Karin Hoelzer, Senior Director of Patient Advocacy at BIO as she opened the discussion during the Biotechnology Innovation Organization’s (BIO) April Coffee Chat.

And indeed, whether it is 340B transparency, price controls, utilization management, vaccine access, or any of the other hot-button issues, many first play out on the state level before they gain steam and trickle up to the federal level.

And this is why collaboration—across states and between patient advocates and other key stakeholders in the biotech industry—is so important when it comes to navigating state legislatures and their impact on patient access to needed therapies.

“States ARE the laboratories of democracy—they really are,” explained Melanie Lendnal, Esq., Senior Vice President of Public Policy & Advocacy at The ALS Association.

So what trends are we seeing across state legislatures, and what can patient advocates do to bring down access barriers and make sure patients get the care they need?

Advocates are getting creative to protect coverage of life-changing therapies

Many patient advocates have seen a particularly frustrating pattern in several states: insurers are increasingly coming up with new barriers to not cover life-changing drugs. One particularly egregious example concerns therapies approved under the Food and Drug Administration’s (FDA) Accelerated Approval Pathway.  In the amyotrophic lateral sclerosis (ALS) community, this is proving to have significant real-world consequences according to Lendnal.

“There is an ALS drug that was approved for a small population of people who have a specific type of genetic ALS. The drug was approved through the Accelerated Approval pathway by FDA,” Lendnal explained. “Although the FDA approved the therapy, some insurance companies have restricted access, calling it ‘experimental’ – which is clearly wrong.”

What that meant in practical terms, particularly when it came to Medicare Advantage plans, is their policies classified this particular treatment as “experimental” or “investigational” and therefore would not cover it, even though it is FDA approved and Medicare covers it.

This is particularly infuriating, Lendnal explained, because this treatment doesn’t just slow the progress of patients’ ALS, it is stopping, and in some cases even reversing it—something previously all but unheard of in the neurodegenerative space.

“In about 60% of cases, people are actually regaining function, which is a massive scientific breakthrough,” said Lendnal. “The fact that people who have health insurance and have this disease, with this genetic mutation, are not able to access it because their policies say it’s ‘experimental’ because it was approved through accelerated approval, is incredibly offensive.”

So, what can patient advocates like Lendnal do? “We worked to open up this barrier using a combination of tactics,” she said.

By combining public affairs, direct engagement with payers, media engagement, and working directly with the Centers for Medicare and Medicaid Services (CMS), the ALS Association saw crucial progress. By the end of 2024, advocates were able to convince CMS to issue a directive to all Medicare Advantage plans throughout the country.

“It told them that, in no uncertain terms, it is unacceptable to state in your policies that you will not cover this drug because you deem it experimental or investigational,” Lendnal said—the first time the CMS ever issued such a directive.

Advocates have a lot more work to do but now advocates have a helpful case study to guide their action. The ALS Association also published an insurance navigator tool that can be used by anyone trying to deal with appeals.

Drug pricing legislation threatens patient access in many states

Despite concerns raised by patient advocates, as well as repeated examples of failures, drug price control models such as Prescription Drug Affordability Boards (PDABs), remain a persistent issue on the state level. This is exacerbated, in part, by federal drug pricing efforts including Most Favored Nation (MFN) type approaches and price setting under programs such as the 2022 Inflation Reduction Act (IRA).

“We think that PDABs are bad for all patients because they don’t help patients with any cost relief at the pharmacy counter, yet they do create a lot of potential interruptions to access and to supply chains,” explained Brian Warren, VP of State Government Relations at BIO.

Despite repeated efforts by advocates to mitigate the problems with the Colorado PDAB, the governor and his administration have remained dogged. And this is notable because Colorado’s PDAB is arguably the highest profile in the U.S.

PDAB legislation in other states remains a complex topic. For example, in Virginia, the legislature has passed a PDAB bill despite the governor raising concerns, and stakeholders are now trying to ask the governor to veto the bill.

Some of the concern raised by stakeholders are around the effects on Medicaid pricing and reimbursement.

“There is (proposed) legislation in Louisiana that is designed a little bit differently than what we see in other states in terms of PDABs, but it ultimately maintains the same problems—especially paired with a bill called SB369, which would mandate Medicare pricing across all state sponsored plans,” explained Jen Laws, President and CEO, Community Access National Network (CANN). “Regardless of what anybody says, that includes Medicaid, and that would be detrimental to sustainability and funding of Medicaid.”

In Illinois, comparatively, they are considering PDAB legislation that includes a carve out that mandates that Medicaid can’t adopt any upper payment limit (UPL) unless Medicaid has done a financial assessment to say that it’s not going to cost them money.

“That originates from a study done in Oregon,” explained Laws. The study demonstrated that implementing a UPL requires careful consideration of many drug pricing and supply chain complexities and requires additional state resources.  “In essence, when you carve out that UPL, what you’re doing is taking the Medicaid Drug rebate value away from the program, which is the reinvestment opportunity for the Medicaid program.”

“So it ends up costing you money when you impose a UPL on Medicaid,” he said.

304B continues to be a challenge, but transparency is slowly improving

340B transparency is ever top of mind for advocates, Warren notes, and so far 340B legislation has only passed in one state this year, Washington, with the passage of SB5981.

“It was a really interesting situation,” added Jen Laws, President and CEO, Community Access National Network (CANN). “The governor’s budget did explicitly carve out Medicaid, because what happens when a provider opts for the 340B reimbursement versus the Medicaid reimbursement is that Medicaid loses their own rebate value from it, which increases state budgetary cost and strain on Medicaid, while the provider runs away with the dollars.”

However, Laws noted, “the legislature there rejected that carve out in pushing for their mandate in terms of expansion. Immediately, the day after, they were sued. So we’ll be seeing how that goes, especially with the turn of the federal government deciding to support manufacturers in limiting 340B’s expansion.”

The core of CANN’s concern, Law explained, is around how 340B is being leveraged by large hospital systems to deplete value from Medicaid, as well as hinder and increase access barriers for patients, which translates into a lack of charity care or rebates for patients—essentially not passing the intended savings onto the patients who need them most.

However, 340B transparency has gained traction in many states. In this year’s report to the Legislature, the state of Minnesota found that, “Based on the second year of reported data … Minnesota Covered Entities earned a collective net 340B revenue of at least $1.34 billion for the 2024 calendar year. This net revenue figure is over twice the reported net 340B revenue for the 2023 calendar year—which was $630 million.”

The report, Warren noted, has been well received by legislators, who recognize that the amount going to hospitals is much higher than many policymakers realize. “It’s not going to the clinics that need this the most,” Warren observed. “It’s going to large hospital systems.”

In fact, accountability and even basic knowledge of where this revenue is going is practically nonexistent.

State legislators “don’t want to see health facilities losing revenues and don’t want to see health facilities closing, and certainly neither do we,” said Warren. “But then there’s also a lot of hospitals and other facilities that are basically just using 340B as a blank check.”

And this blank check mentality has real-world consequences, as Laws explained.

“There was a massive scandal in Iowa with the AIDS Drug Assistance Program,” he recalled. “For the first time in more than a decade, the state’s going to have to introduce a waiting list for people who need assistance with their AIDS drug access because the contract pharmacy serving the ADAP ran away with $22 million in rebates and then went belly up.”

Biomarkers are changing the game – but access may be in peril

Biomarker legislation is going more mainstream this year with a number of states expanding access to biomarker testing, and if the current trend keeps up, this could be very good for patients.

“Biomarker testing is increasingly important for connecting patients with targeted treatments that are driving huge improvements in cancer survival, but the testing is the key that unlocks access to these new therapies,” said Hilary Gee Goeckner, Director, State & Local Campaigns – Access to Care, American Cancer Society Cancer Action Network. “Unfortunately, there are big disparities in who is benefiting from biomarker testing and biomarker informed care.”

What Goeckner worries is that, if the system is not updated to fit the new science, then healthcare disparities that we are seeing today will only exacerbate. And this is an important thing to consider in the cancer space because biomarker testing can oftentimes be analogous to giving a patient and their doctor a flashlight in a darkened room—treatment wise.

“Without access to biomarkers, it means patients may be going through more trial and error,” Goeckner said. “They might be taking treatments that their doctor could have known weren’t going to be effective or not taking a treatment that is most likely to work for their cancer.”

But to ensure that biomarker testing is available and accessed, a couple things need to happen: insurers need to cover the tests, and patient privacy needs to be maintained to ensure the data cannot later be used “against” a patient, for instance by increasing life insurance premiums.

“We’ve been leading campaigns at the state level for the last about four years to expand insurance coverage of biomarker testing and tying that to the latest evidence so that the coverage can keep pace with the science,” said Goeckner. To date, 24 states have enacted laws expanding insurance coverage of biomarker testing.

“One example of the regulatory work we have been doing is genetic privacy when it comes to collecting biomarkers,” said Lendnal. “We don’t want that being a factor when it comes to, for example, life insurance policies. More and more we know where precision medicine is going. We have things like gene therapies and CRISPR, and we want people not to be afraid to get genetic testing because of the impact that might have on life insurance, long term care insurance, disability insurance, etc. So we’ve been working at the state level on this and are cautiously optimistic.” Patient Advocacy organizations can sign on to ACS-CAN’s State Policy Principles to Support Access to Biomarker Testing here.

But even as biomarker legislation gains traction across the country, advocates are increasingly concerned about the financial and regulatory pressures that could complicate progress—in particular due to an issue called “defrayal.”

“Defrayal is not a particularly fun topic,” said Goeckner.

Under the Affordable Care Act, all health insurance plans offered through the ACA marketplace exchange must, at a minimum, cover federally defined essential health benefits (EHBs)—a set of 10 core categories of services typically included in employer-sponsored insurance plans, such as coverage for emergency services, hospitalizations, or maternity and newborn care. States can mandate that insurers cover additional benefits beyond the EHBs in all plans offered on the ACA exchange—but the states may be required to “defray” the added costs.

According to Goeckner, since the ACA went into effect, states have increased coverage for critical therapies and services, including biomarker testing, without defraying the costs for those benefits. However, a proposed change to federal insurance regulations could change that dynamic.

“New proposed regulations for insurers came out earlier this year, as part of what is called the notice of benefit and payment parameters (NBPP). The rule proposes many, many concerning changes to private health insurance, including changing what would constitute a mandated benefit beyond EHBs and warrant defrayal. This change is seen as signaling that this administration wants to crack down on states mandating additional benefits and perhaps not making these payments,” Goeckner said.

For patient advocates, the concern is that this change could discourage states from adopting or maintaining coverage requirements that could be construed as mandates for services like biomarker testing.

“That is very troubling for patient advocates like us, and we are worried that if that rule is finalized as drafted, it could lead to some states undoing important progress they’ve made at the state level, whether it’s for biomarker testing or other access issues, and certainly be a big deterrent to states making additional progress going forward,” Goeckner said.

Advocates say that reality makes patient storytelling increasingly important in legislative debates, particularly as states grapple with tightening healthcare budgets and rising Medicaid costs.

“We really want to keep our work patient-led and highlight stories of how these issues impact real people in order to get lawmakers to care about the issue and really buy in and be willing to allocate money for an issue like defrayal or additional Medicaid costs or additional costs for state employees, because they see that it really matters,” Goeckner added. “We also need to acknowledge that there are challenges and headwinds with state budgets generally. Budgets for Medicaid are a big challenge right now, especially. We need to acknowledge that, but also keep pushing for policies that will make a difference for patients and caregivers.”

Making fast-paced state advocacy feasible

It is astounding to see just how much work has already been done on the state level this year  by patient advocates.

As Warren explained, “It’s about ensuring that innovative therapies continue to make their way to patients, and that patients are able to actually access them and afford them.”

And to do that, cooperation and focus is key.

“I would strongly encourage folks to find and join coalitions, especially on issues that are already happening, and get tied into what’s already happening in a particular state or a particular issue that you care about so that you’re not trying to create this out of whole cloth,” said Goeckner.

“Prioritize what you’re doing,” said Lendnal. “One of the things that we learned early on when it comes to state work is you can stretch yourself so thin by trying to do all of the things, but really be intentional about zeroing in on the things that you want to make sure you do really well.”

“Ultimately, what we’re doing is state-based community building across issues, education for folks who have time, and trying to build resources for folks who don’t have a lot of time, but maybe still want to make sure that their voice is heard,” concluded Laws. “Those investments into the future are really the way to go. Those investments into being able to touch a legislator out of session is astronomically powerful.”

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