Some states are pushing for transparency on drug pricing, but Vermont is the first to make serious headway. The state's legislature recently passed a bill that would require drug companies to explain price increases on certain meds.
The bill would order the state health board to submit a list of 15 prescription drugs with dramatic price increases to the state attorney general’s office. The office would then require the drug companies involved “to provide justification for the increase in the price of the drug in a format the Attorney General determines to be understandable and appropriate,” the House version of the bill stated, as quoted by the VT Digger.
Drugmakers would need to explain “all factors that have contributed to a price increase” and “the role of each of each factor in contributing to the price increase,” according to the bill. There are no penalties for companies that do not comply with the attorney general’s request, though.
The legislation doesn’t just take aim at drug companies. The bill would also require health insurance companies through the state’s Health Connect program to set up interactive websites so consumers can find out how much their prescription drugs cost.
The measure is “overdue,” Vermont Rep. Christopher Pearson told FiercePharma. States are struggling with the increasing demand that prescription drug prices put on state drug budgets, Pearson said, particularly Medicaid.
“We’ve always over the past several decades tried different approaches to this problem, but we’re limited by what states can do,” Pearson said. “Transparency is coming to light as a new strategy to put some pressure on the industry and Congress to enact meaningful reform.”
The bill is now on its way to Gov. Peter Shumlin, who will needs to sign it to give a final stamp of approval. “I’ve had some signals that (the governor) would sign it but it’s not up to my decision making,” Pearson said.
Unsurprisingly, the Vermont measure is facing pushback from pharma. In March, industry group PhRMA at a Vermont House Health Care Committee meeting said that price transparency legislation would drive up drug prices.
In April, PhRMA submitted written testimony saying that the information on pricing might not be relevant because companies don’t sell drugs to doctors and pharmacies. In many cases, manufacturers “are not privy to the final price paid in Vermont,” PhRMA wrote in its testimony.
Plus, some needy populations get drugs at lower prices through special programs. Forcing companies to disclose prices would “chill the incentive” for drugmakers to give discounts to those groups, PhRMA wrote.
Legislators “should focus instead on giving patients and families what they actually need: predictable and accessible information about the out-of-pocket costs they will face and enforceable, common-sense rules that prevent discrimination and remove barriers to receiving care,” PhRMA spokeswoman Priscilla VanderVeer told FiercePharma in an emailed statement.
Meanwhile, other states are also working on legislation that would require more drug pricing transparency. New York, Pennsylvania, California, Massachusetts and Virginia have all proposed similar measures to Vermont this year and in 2015.
This November, a California ballot initiative could mandate drug pricing for state payers equal to what's paid by the U.S. Department of Veterans Affairs. The measure recently gained support from Democratic presidential hopeful Sen. Bernie Sanders (I-VT).
But pharma is working hard to make sure that these initiatives don’t see the light of day. PhRMA and other industry groups have shelled out $49 million to fight the ballot measure in California. That number compares to the $4 million that’s been raised to back the initiative.
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