[Ip-health] Angry Over Drug Prices, More States Push Bills for Pharma to Disclose Costs

Elizabeth Rajasingh elizabeth.rajasingh at keionline.org
Mon Apr 27 07:40:45 PDT 2015


Angry Over Drug Prices, More States Push Bills for Pharma to Disclose Costs
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Should drug makers be required to disclose their costs to justify rising

This is what a growing number of state legislatures are considering. Over
the past several weeks, lawmakers in a handful of states stretching from
California to Massachusetts have introduced bills in a bid to force the
pharmaceutical industry to conduct an economic striptease.

“We need to have some transparency,” says Tony DeLuca, a Democrat who
chairs the Pennsylvania House Insurance Committee and who introduced one
such bill earlier this week. “Some of the sticker prices are outrageous.
I’m hoping it achieves lower health care costs.”

The bills are not wholly identical. Some would require drug makers to
report profits and various operational costs for any medicine that has a
price tag of more than $10,000 a year, while others seek this information
for all medicines, regardless of price. A bill was also introduced in North

The effort comes as a national debate intensifies over prices for
prescription medicines. Over the past year, payers – both public and
private – have remonstrated over the cost of new specialty drugs for
hard-to-treat ailments and for older generic drugs that were supposed to
offer low-cost alternatives.

A new poll by the Kaiser Family Foundation found that 76% of Americans
overall – and across party lines – say their top health care priority is
ensuring that high-cost drugs for chronic conditions, such as HIV,
hepatitis, mental illness and cancer, are affordable.

The issue is placing drug makers on the defensive, even as they argue
pricey new medicines – notably, those for combating hepatitis C and certain
rare diseases – represent good value for illnesses that would, otherwise,
cost more to treat in the long run.

These bills represent a new front, though, in trying to blunt escalating
price tags. And the legislation is winning enthusiastic backing from
business groups, consumers advocates and health insurers, which some
legislators say have helped craft language.

“This is about starting a conversation,” says Charles Bacchi, chief
executive at the California Association Plans, which worked with a
California legislator on one bill. “We need real answers about why these
drugs are priced so high. Yes, there are limits to what a state can do, but
it’s a debate we need to have.”

To what extent these bills may succeed is uncertain, at best.

Drug makers, not surprisingly, are pushing back and recently helped defeat
legislation in Oregon. Earlier this week, the pharmaceutical industry trade
group testified against the bill in California, where a vote was postponed
until next week in light of opposition, according to a legislative aide.

As far as drug makers are concerned, the bills are not only onerous, but
make demands they maintain cannot be met. For instance, an industry trade
group argues that providing development costs for some drugs may be
impossible when research was simultaneously conducted on other medicines
that failed. The bottom line, says the California Healthcare Institute, is
that the bill would “stifle innovation.”

“The price charged for an individual drug is not a reflection of
development costs,” says Ken Kaitin, director of the Tufts Center for the
Study of Drug Development, which receives pharmaceutical industry backing.
“Pricing strategies are based on therapeutic value, market size, usage,
patent life, competition and other factors.”

Even if one or more bills were to become law, there is no certain path
toward lowering prices. But the effort may resonate around the country,
especially with the 2016 presidential campaign under way. “This may be a
model that other governments may want to build upon,” says Jamie Love of
Knowledge Ecology International, a non-profit group that tracks access to
medicines issues.

“While it is too soon to know if this prescription transparency legislation
will continue to expand this year,” says Richard Cauchi, the program
director for health insurance, financing and pharmaceuticals at the
National Conference of State Legislatures, “state legislators often do look
at what their colleagues in other states are doing.”

Elizabeth Rajasingh
Perls Research and Policy Fellow, Knowledge Ecology International
1621 Connecticut Ave. NW, Suite 500
Washington, DC 20009
elizabeth.rajasingh at keionline.org | 1-202-332-2670

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