Debate Over Prescription Drug Pricing Moves To States
Posted to: Business, The Economy, Health Care, Insurance, Jobs, Legal, Nonprofits, Transparency, White House
HARTFORD, CT — With Congress mostly paralyzed, the debate over how to lower prescription drug prices is moving to the states.
Earlier this year, Connecticut passed bipartisan legislation that addresses fairness in pharmacy benefit manager contracts. It eliminates the “gag clause” that prevents pharmacists from sharing price information with their customers.
At the moment a pharmacist can’t tell a customer that if they paid out-of-pocket without using their insurance the drug would be cheaper. Currently, the pharmacy benefit managers are pocketing the difference between the price of the drug and the prescription co-pay the customer is being charged.
The new law goes into effect on Oct. 1.
Maryland and Vermont also passed legislation aimed at lower prescription drug prices.The Vermont law seeks to bring more transparency to pricing and the Maryland law aims to stop generic drug price gouging.
Drug companies filed a federal lawsuit in July claiming Maryland’s first-in-the-nation measure is unconstitutional and vague.
If states continued to lead the way, then it’s likely to be the first of many lawsuits challenging states rights to regulate big pharmaceutical companies.
The Yale Global Health Justice Partnership, in collaboration with the National Physicians Alliance and Universal Health Care Foundation of Connecticut, released a policy paper entitled, “Curbing Unfair Drug Prices: A Primer for States.”
The paper is intended to outline the state-level initiatives that can be taken to rein in prescription drug prices.
“Evidence has unequivocally shown that high drug prices are not linked to the actual costs of research, development and manufacturing,” the report states. “Instead, inflated drug prices are a result of drug manufacturers’ power to charge whatever price the market will bear. The need for legislative action is urgent.”
Model legislation, according to the report, should cover prices of both generic and patented drugs and mandate transparency about drug prices and development, manufacturing and marketing on a drug-by-drug basis. It also recommended forming coalitions to help make sure the legislation doesn’t get watered down by the powerful pharmaceutical lobby.
The report says the leaked draft of an executive order on drug pricing by President Donald Trump’s administration contemplates cutting regulations, but “mentions no serious action to lower costs.”
The pharmaceutical industry testified earlier this year in Connecticut on a bill would have increased the ability of the Attorney General to regulate abusive pricing of pharmaceuticals. It argued that health insurance carriers and plan administration costs “are rising at more than twice the rate of drug spending.”
The Pharmaceutical Researchers and Manufacturers of America testified that recent data shows that insurers are increasingly requiring patients to pay exorbitant out-of-pocket costs to access the medicines they need, far more than other health care services covered by an individual’s health plan.
Instead of pitting one industry against another, the Global Health Justice Partnership report focuses on two ways states can help lower prescription drug prices. One way is to bring greater transparency to the cost of prescription drugs and another is to crack down on price gouging, which gets tricky because of federal patent laws. It’s why Maryland was only able to focus its legislation on generic drugs.
However, there is legislation in other states seeking to challenge both patented and generic drug pricing. Massachusetts and Oregon, according to the report, have ambitious bills targeting pricing of all prescription drugs.
“The status quo is wholly unacceptable,” Zain Rizvi, a Yale Law School graduate and a lead author of the report, said. “Drug companies continue to launch treatments at record-high prices, relying on self-cited and scientifically suspect justifications. Now more than ever, we need real evidence about the costs of drug development.”
It’s a problem that’s been around for several years, but seems to be escalating.
“As healthcare providers, we are increasingly seeing our patients make tough decisions, having to choose between paying for their costly, but necessary medicines or food on the table,” Dr. Reshma Ramachandran, co-chair of the National Physicians Alliance FDA Task Force and a stakeholder in the report, said. “Now, at a critical time where millions face the possibility of not having coverage for these increasingly costly prescriptions, this report offers state policymakers concrete options to provide relief for their constituents.”
A January Kaiser Health Tracking Poll found that lowering the cost of prescription drugs was more important than repealing Obamacare.
“States can play a key role in protecting everyday people from unfair and unaffordable prescription drug prices. This paper provides a roadmap for states that are ready to fight back,” Jill Zorn, senior policy officer at the Universal Health Care Foundation of Connecticut, said.
Connecticut’s Public Health and the Insurance and Real Estate Committees are expected to tackle the issue again when the new session convenes in February 2018.