States' efforts to fight skyrocketing costs pose 'modest risk to pharma': Report

California State Capitol building

States across the country have been battling it out with Big Pharma over drug pricing, with some introducing bills that take aim at skyrocketing costs. People on both sides of the issue are wondering whether the states’ efforts will pay off, and now, some analysts have an answer: “probably not.”

“It seems the current wave of state legislations brought up to address the increase in drug costs is a very modest risk to pharma, if at all,” Bernstein analysts said in a report. The proposed legislation coming from the states seems “to be more rhetoric than imminent pricing concern,” the analysts said.

States’ legislative efforts generally fall into three camps: legislative bills that push for increased transparency on drug pricing; ballot proposals that want states to pay the same amount for drugs as the VA; and a pharma-sponsored effort that would limit payers’ use of copays, which the industry has blamed for rising costs.

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States have less of a chance of gaining traction with transparency initiatives and ballot proposals, according to the report. Most state bills that would require pharma to disclose R&D costs “have failed at the legislatures,” and others “face an uphill battle,” the analysts said. Plus, even if the bills passed, there’s no guarantee that pharma would act on pricing. “The ‘shame’ alone in sharing this information is not a strong enough mechanism for pharma to start to address prices,” the analysts said.

California and Ohio have both proposed ballot initiatives that would make drug pricing for state payers equal to what is paid by the VA. But pharma is working hard to quash these initiatives, the report points out. In California, for example, PhRMA and other industry groups have shelled out $49 million to fight the ballot measure. For comparison’s sake, about $4 million has been raised to back the initiative.

The third effort, a pharma-backed effort to reduce high copays, could be the one to gain the most traction, according to the Bernstein analysts’ report. The group of bills has been called “highest priority legislation” for PhRMA, and there are active initiatives in 10 states. “We suspect that over time, more (bills) will be introduced,” analysts said.

Still, it might take a while for any of the states’ efforts to catch on. The industry “is very much ‘on the ball’” fighting the initiatives, analysts point out. And many of the measures are not well-financed or supported by politically powerful groups. “We suspect any progress here would be delayed until after the current election cycle,” Bernstein analysts said.

Related Articles:
Pharma and payers agree: It's time for more dialogue on drug pricing
Drug industry lashes out at Massachusetts drug price transparency effort
Insurers jump into battle over drug prices at state level
Big Pharma teams up to defeat drug pricing proposal in California
California lawmaker calling for more pricing transparency for costly meds


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