Regulatory Focus™ > News Articles > Vermont Governor Signs Bill With Possible $10K Fines for Drug Price Hikes

Vermont Governor Signs Bill With Possible $10K Fines for Drug Price Hikes

Posted 03 June 2016 | By Zachary Brennan 

Vermont Governor Signs Bill With Possible $10K Fines for Drug Price Hikes

Vermont Gov. Peter Shumlin (D) on Friday signed into law a bill that would highlight drugs that the state spends significant amounts of money on, and companies owning those drugs could be hit with up to $10,000 in penalties if the wholesale acquisition costs rise too quickly and they fail to disclose the reasons for such hikes.

Shumlin said Friday the bill was directed at providing answers on why pharmaceutical companies, like Turing Pharmaceuticals, disproportionately hike the price of some drugs. Democratic presidential hopeful Bernie Sanders also praised the signing of the bill.

The signing comes as 13 other states, including New York, California, Ohio, Massachusetts and Virginia, are drafting new drug price transparency bills. Ohio and California are offering ballot measures that would place new price caps on some drugs.

Vermont Law

Under the new law, Vermont’s Green Mountain Care Board, in collaboration with the Department of Vermont Health Access, will identify annually up to 15 prescription drugs on which the state “spends significant health care dollars and for which the wholesale acquisition cost has increased by 50 percent or more over the past five years or by 15 percent or more over the past 12 months.”

For each prescription drug identified, Vermont’s Office of the Attorney General shall require the drug’s manufacturer to provide a justification for the increase.

If such justification is not provided, the Attorney General may bring an action in the Civil Division of the Superior Court, Washington County, for injunctive relief, costs, and attorney’s fees and a civil penalty of no more than $10,000 per violation, though each “unlawful failure to provide information shall constitute a separate violation.”

The Attorney General, in consultation with the Department of Vermont Health Access, shall provide a report to the General Assembly on or before 1 December of each year based on information received from pharma companies and the report will be posted on the Attorney General’s website. But those reports will not include information on which drugs or companies were involved.

“Information provided to the Office of the Attorney General pursuant to this section is exempt from public inspection and copying under the Public Records Act and shall not be released in a manner that allows for the identification of an individual drug or manufacturer or that is likely to compromise the financial, competitive, or proprietary nature of the information,” the law reads.

Industry group PhRMA protested the bill’s passage, saying in comments: “Revealing competitor pricing, or the perception that such information could be revealed even in the aggregate in the Green Mountain Care Board’s report, could lead to disincentives for deeper discounts and rebates.”

The law also deals with drug formularies, dispensing fees and a pilot project on out-of-pocket costs.

Law S.216

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