[Ip-health] Boston Globe: Bill to rein in drug costs spurs controversy

Zack Struver zack.struver at keionline.org
Mon Apr 18 11:39:44 PDT 2016


​​Bill to rein in drug costs spurs controversy

By Robert Weisman GLOBE STAFF  APRIL 11, 2016

The lead sponsor of a Massachusetts bill calling for some of the most
sweeping steps in the nation to control prescription drug costs scrapped a
controversial provision that would have capped prices on treatments for
critical illnesses such as hepatitis C.

Instead of setting maximum allowable prices for all consumers, an amended
version of the legislation released by state Senator Mark C. Montigny would
enable public health programs to receive rebates on a roster of expensive

Even with the price-cap proposal removed, the bill drew harsh criticism
from biopharma industry executives, who complained at a State House hearing
Monday about requirements that drug makers disclose their research,
marketing, and manufacturing costs. Health insurers and consumer advocates
pushed back, saying something has to be done to rein in spiraling drug

“They’re pricing disease-curing drugs beyond the reach of so many,” said
Amy Whitcomb Slemmer, executive director of Health Care for All, a Boston
consumer advocacy group that backs the bill. “It’s time for us to get
feedback on whether we’re getting the value we deserve.”

Former life sciences venture capitalist Jonathan Fleming, who now runs
Cambridge startup Q-State Biosciences Inc., warned the proposed legislation
would create a morass of administrative costs for young companies seeking
to treat or cure serious illnesses while having a chilling effect on
investment in medical research.

“This bill is a nightmare,” Fleming told members of the Joint Committee on
Health Care Financing. “It raises our costs and increases the difficulty of
getting capital to cover it.”

Prescription drug costs are the fastest-growing component of health care
spending in Massachusetts, rising 13 percent in 2014, the most recent year
for which state data are available, according to the state Health Policy
Commission. Among the most expensive new medicines are hepatitis C drugs
that cure the liver-ravaging virus in most patients but have crippled the
finances of Medicaid insurers, as well as a new class of
cholesterol-lowering drugs.

Similar “transparency” legislation has been filed in New York, California,
Pennsylvania, Texas, North Carolina, and Oregon, though the specifics of
each bill vary. President Obama’s new federal budget, proposed in January,
also contains a provision requiring drug makers to disclose the costs that
go into their drug pricing. None of the provisions has yet been passed by

In presenting his amended bill to the committee, Montigny, Democrat of New
Bedford, emphasized that the legislation — which has drawn criticism from
drug industry groups in Massachusetts and nationally — does not mandate
price controls.

“We as a government are not regulating prices,” he told a standing-room
only crowd of supporters and opponents of the bill. But, he said, the state
has “a right to know” what costs are factored into the prices of
prescription medicines that are squeezing consumers even as they treat
everything from high cholesterol to cancers to the liver-ravaging hepatitis
C virus.

The new version of the legislation authorizes the state’s Health Policy
Commission, a health cost watchdog agency, to review data on the
highest-cost drugs and determine — in consultation with independent groups
— if their price tags are “excessively higher than justified” and
jeopardize the state’s ability to meet a 3.6 percent benchmark for annual
health cost increases.

If the health policy panel finds a drug’s price is excessively high, it
could authorize rebates to the state’s Medicaid program, known as
MassHealth, as well as to private insurers that contract with the state to
insure low-income residents. Also eligible for rebates would be the Group
Insurance Commission, the government agency that insures state employees.

Montigny’s amended bill, by eliminating the proposed cap, could make the
legislation more palatable to a broader segment of lawmakers. But its
prospects in the Massachusetts Legislature are uncertain.

Testifying in favor of the bill, Lynn Quincy, associate director of health
policy at the Consumers Union, a national nonprofit that publishes Consumer
Reports, said many of the nearly 50 percent of Americans who take
prescription drugs regularly have difficulty affording them.

“It’s nearly impossible for policy makers, regulators, and regular
consumers to know the true markup on drug prices,” Quincy said, suggesting
the factors that go into calculating drug prices have long been “shrouded
in secrecy” in the United States.

Drug industry representatives, however, said the bill would require
companies to disclose only costs related to specific therapies, not their
outlays for the majority of experimental drugs that fail to make it to the
marketplace. They also argued that health care providers and insurers — not
drug makers — are responsible for the lion’s share of medical expenses.

“The costs that would be disclosed have no meaningful relation to true
health care costs,” said Robert Coughlin, president of the Massachusetts
Biotechnology Council, who said the bill focuses on “upfront” research
costs but doesn’t take into account “downstream costs avoided” by
treatments that keep people out of the hospital. “This would needlessly
raise the administrative burden on innovation companies. It will not help
patients one bit.”

While the bill seeks to rein in the rising costs of brand-name drugs, the
health care system is also facing a rapid increase in the prices of generic
medicines, which historically have worked to keep health costs down, said
Eric Linzer, senior vice president of the Massachusetts Association of
Health Plans, a health insurance trade group.

“The challenges that we’re seeing are not exclusive to specialty drugs,” he

Some lawmakers at Monday’s hearing said they were skeptical of industry
claims that disclosure of costs would put a financial burden on drug makers
or cause them to flee the state.

“I’m not convinced that what’s in this bill prevents you from doing your
work,” state Representative Marjorie Decker, Democrat of Cambridge, told
industry officials. “It doesn’t make sense having all these therapies
developed so only a few privileged people can afford them.”

Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428

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