As New Mexico struggles to cope with declining tax revenues and cuts to classrooms and health care, it is imperative for legislators to find new ways to improve the state’s bottom line. That is why it is time to enact innovative policies to rein in the soaring cost of prescription drugs. It places a growing burden on our state budget each passing year.
With its enormous buying power, New Mexico should be more vigorously negotiating pharmaceutical drug prices to lower taxpayers’ expense, and to free up resources for cash-strapped public education and other essential services. SB 354, creating an Interagency Pharmaceutical Purchasing Council, will make it happen.
The bill, if implemented, could save New Mexico up to $100 million per year in prescription drug costs, according to Dr. Martin Hickey, CEO of New Mexico Health Connections, the state’s largest nonprofit health plan.
The state, along with publicly funded health care institutions and retiree health plans, is a major purchaser of prescription drugs. Together they spent over $670 million on prescription drugs in 2016, a staggering 54 percent increase from just two years prior. Spending on prescription drugs now accounts for a large, and the fastest growing, part of our state’s health care budget. It could grow to a crippling portion in a few years if we do not act.
My bill would require we leverage the combined purchasing power of taxpayer-funded health agencies in New Mexico including Medicaid; the departments of Health, Human Services and Corrections; retired state government workers’ benefits; UNMH; and other public health organizations to drive hard bargains with pharmaceutical drug manufacturers for lower drug prices.
Using state buying power and bulk purchasing to negotiate for cheaper prescription drugs works. Some states are using this strategy on their own to save millions for their budgets. Other states have joined together in multistate cooperatives to create even larger purchasing pools and larger savings. It is long overdue for New Mexico to take a hard look at these successful strategies.