Over the past five years, Massachusetts' Medicaid program has doubled its spending on drugs - from around $1 billion to $2 billion.

Nationally, spending on prescription drugs makes up around 17 percent of total U.S. health care spending. Pharmacy spending is the single largest reason that health care spending in the U.S. is much higher than in Europe and other developed countries.

While a dialogue on drug spending is starting in Washington, Gov. Charlie Baker's administration is planning to propose changes to the way drugs are priced and purchased in Massachusetts, with details of the proposal expected in January.

Speaking to reporters after addressing a Massachusetts Association of Health Plans conference in Boston, Baker said Thursday that he is looking at approaches to addressing prescription drug costs "that ensure people have access to the medications they need, but also in a way that creates a process around affordability."

For the state, controlling drug prices is an important part of budgeting. MassHealth, the state's Medicaid program, comprises 40 percent of the state budget, with half reimbursed by the federal government.

Secretary of Health and Human Services Marylou Sudders described the problem in an op-ed in CommonWealth Magazine last week. Sudders wrote that MassHealth costs per member for drugs have risen by 20 percent since 2015, driven by a growing number of expensive drugs that are new and do not have competition.

"The rise in high-cost drug prices that have no competition is outpacing our ability to keep MassHealth sustainable," Sudders wrote.

After a new drug is developed, the developer generally has exclusive rights to sell it for some time. Drug makers say this is necessary to incentivize the industry to develop new drugs and allow them to recoup the costs that went into research and development.

Baker, in his speech at the MAHP conference, said there is enormous value to innovative drugs. But at the same time, MassHealth today is spending $600 million to cover just 30 drugs.

"There has to be some kind of conversation that balances the importance of innovation with issues and questions around affordability," Baker said. "There's a grownup dialogue that needs to be had on this. We are anxious to have it."

Baker said while innovation matters, "The flip side is innovation that no one can afford is nowhere near as effective as innovation that people can afford."

Sudders said, during a panel discussion at the MAHP conference, that 23 drugs now heading toward FDA approval are expected to add $80 million to $100 million to MassHealth's spending on drugs.

The Baker administration last year proposed letting the state limit the drugs it covers through MassHealth, a proposal the pharmaceutical industry opposed. The federal government rejected the state's request for flexibility.

Massachusetts lawmakers considered other proposals to lower MassHealth drug costs as part of a larger health care bill, but negotiations on the bill fell apart.

Now, Baker and Sudders say the administration is planning to release another proposal.

Sudders said Thursday that the governor could lay out some specifics in his annual State of the Commonwealth address in mid-January. Baker said he will likely include some health care reforms in his budget proposal, due in late January.

Asked whether he might propose limiting the MassHealth drug formulary again, Baker said the state "got a pretty clear message from the feds on that issue last year." But he said the issue is one that needs to be talked about and "there's a bunch of different options and opportunities there."

Sudders wrote in CommonWealth that the administration will push for reforms in how drugs are purchased, transparency in prices and flexibility and leverage in negotiating prices. She did not provide specifics.

Sudders said Thursday that the administration plans to talk to the Legislature about Medicaid drug pricing strategies.

Baker was noncommittal on whether any proposal would affect private sector insurance, saying he needs to talk to lawmakers.

Stuart Altman, a Brandeis University health economist who chairs the Massachusetts Health Policy Commission, urged private insurers attending the MAHP conference to address drug pricing. Otherwise, he said, drug companies will use private insurers to make up any loss from public payers.

"If the government, through Medicare or Medicaid, do it and the private sector is left there hanging, you will again become the cash cow for the drug companies," Altman warned.

The issue is not unique to Massachusetts. Nationally, President Donald Trump has talked about the need to lower drug costs.

In late October, Trump unveiled a proposal to let Medicare set the price it pays for drugs based on prices internationally. A federal study of 16 other developed countries found that the U.S. pays on average 44 percent more for drugs than those countries. European countries tend to more closely regulate drug pricing than the U.S., which generally lets companies set prices.

"For decades, other countries have rigged the system so that American patients are charged much more -- and in some cases much, much more -- for the exact same drug," Trump said in a speech laying out the proposal. "It's wrong."

Ezekiel Emanuel, who advised the Obama White House on health care policy and chairs the Department of Medical Ethics and Health Policy at the University of Pennsylvania, spoke at the MAHP conference and predicted that Congress will have to address pharmaceutical spending.

Emanuel said spending on drugs accounts for 3 percent of the U.S. gross domestic product. Government officials project drug spending will increase by 6.3 percent annually for the next several years, due to higher prices and more use of specialty drugs.

For example, Emanuel said a new gene therapy treatment for hemophilia has the potential to cure 20,000 people - at a cost of around $2 million per patient.

"I do believe the heart of the affordability complaint is drug prices for most Americans," Emanuel said. "It's not getting better, and no one's predicting it's going to get better."

Emanuel predicted that nothing will happen in 2019 and 2020 due to a lack of will to compromise before the presidential election.

But he speculated that by 2020 "it will be one of the top three issues in the presidential election," which will lead to action in 2021.

Sudders said Massachusetts anticipates moving forward regardless of what happens federally. With MassHealth comprising so much of the state budget, Sudders said, "We don't have that luxury of waiting to 2021."