The Washington Health Care Authority is calling for new measures to reign in prescription drugs costs in the state.

The agency's report comes one day after KING 5 examined how runaway prices have impacted taxpayers, in a week-long series, "Side Effects."

The HCA's report addresses a spring request by lawmakers such as Sen. Reuven Carlyle, D-Seattle, for the state to identify immediate steps to slow the rising cost of drugs purchased by taxpayer funded programs, currently over $1 billion annually in Washington state.

"We have failed the taxpayer categorically, and we simply have got to do a better job," said Carlyle.

In the report, the HCA said it will pursue additional drug rebates, explore whether states could save money by banding together to buy prescription medications, and test payment models that tie prices to positive outcomes.

Here is an excerpt from the report elaborating on those ideas and addressing the state's next steps:

1. Pursue strategies that increase both the number of drug classes subject to rebates, as well as the dollar value of each rebate. For Medicaid FFS, provided funding is available to contract with an additional evidence vendor, the initial strategy would be to increase the number of drug classes on the FFS PDL. HCA should undertake a comprehensive study and make a recommendation to the legislature regarding the creation of a single PDL across HCA's programs, including Medicaid FFS, Medicaid MCOs and UMP. A comprehensive study of this nature could be completed by January 1, 2018.

2. Explore potential strategies and make recommendations that leverage multi-state purchaser consortiums, beginning with the existing NW consortium. HCA could also convene other states to discuss purchasing strategies that could be built around the concept of a single preferred drug list used by all consortium members. The purchasing pool would initially involve state agencies that purchase prescription drugs directly (e.g. DSHS and DOC) as well as those that reimburse pharmacies for prescription drugs dispensed to their members (e.g. Medicaid, UMP, and Worker's Compensation). The purchasing pool could also be expanded to include other states that agree to follow the purchasing strategy around a single PDL.

3. In conjunction with its work with SMART-D, HCA should identify and possibly test one or two alternative payment models that are outcome or financially based and could be implemented through Medicaid and/or UMP. An example would be to engage a manufacturer of a hepatitis C medication to guarantee a cure rate for patients that take the drug.

4. With technical support provided from participating in SMART-D, HCA should investigate and identify potential options to obtain broader access to the 340B Drug Discount Program either through MCO contracts or centers of evidence with a primary focus on specialty drugs. The 340B drug discount program is a U.S. Federal government program that requires manufacturers to sell prescription drugs at a steep discount to eligible health care organizations serving low-income or indigent patients.

The report also discusses additional strategies for saving tax dollars that would require action in the state legislature and Congress.

Those considerations include increasing drug price transparency, using state consumer protection laws to limit what drugmakers can charge, and seeking the ability to import drugs into the U.S. from Canada on a state by state basis.

"I think Congress needs to take a comprehensive look at the current failure of the market of drug pricing and identify strategies to correct that market failure," said Dr. Daniel Lessler, Chief Medical Officer for the state Health Care Authority. "If the prices keep going up, it's going to continue to affect the state budget, and it's going to take more and more state dollars to cover the cost of these drugs. That means state dollars that in all likelihood aren't available to go somewhere else."

Sen. Carlyle, who has been outspoken on the need for drug-price reform, responded to the report late Friday calling it a "good first step."

"I'm extremely grateful the agency responded with such a thorough consideration of policy options. We have an obligation to the taxpayers to put our game hats on and get serious about the crushing impact of prescription drug prices, and that is what I intend to do," Carlyle said.