Regulatory Focus™ > News Articles > Vermont Drug Price Transparency: New Law Calls Out Egregious Price Spikes

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Posted 06 December 2016 | By Zachary Brennan 

Vermont Drug Price Transparency: New Law Calls Out Egregious Price Spikes


Last June, Vermont Governor Peter Shumlin (D) signed into law a new pharmaceutical price transparency bill that sought to expose the companies and products seeing the largest price hikes.

This month, Vermont released the first of the reports required under the law, calling into question price hikes from large brand name companies, including Amgen, Mylan, Abbott and Takeda, and generic drugmakers including Perrigo and a private company called Mutual Pharmaceutical Company, which raised the price of its generic antibiotic by 4,787% in the last five years.


Under the law, Vermont is required to disclose 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% or more over the past five years or by 15% or more over the past 12 months.

According to the latest report, of 87,248 national drug codes evaluated, 9.4% saw a more than 50% increase in the last five years and 4.6% saw more than 15% increase in the last year.


“Note that a significant number of NDCs where the WAC [wholesale acquisition cost] has exceeded the threshold are generic, over 50% in the last year,” the report says. “The average percent increase in generic drugs for both time periods is GREATER than the average percent increase in brand drugs.”

According to the report from 1 December, the manufacturers identified a number of factors they consider in making pricing decisions.

“Most said that they have pricing committees that meet to discuss and approve prices, change those prices, and determine payer rebates. The factors commonly mentioned by the manufacturers as impacting their decisions to increase prices include (in no particular order): cost effectiveness (meaning the economic value to patients given the effectiveness of the drug, compared to other drugs in the same class); the size of the patient population for the drug; investments made (including in research and development) and the risks undertaken; creation and maintenance of manufacturing facilities and capabilities, including the ability to address drug shortages caused by production issues; cost of ingredients; competition, including for drugs,” the report says.

The pharmaceutical companies also

raised questions about the use of WACs in the analysis, repeating as they have previously that the manufacturers believe that pricing analyses should be made on the basis of the prices actually paid, after the deduction of discounts, price concessions and rebates.

“Several manufacturers commented that there were relatively small increases in the net prices paid by Medicaid for the selected drugs, that the net prices of those drugs have remained fairly constant or decreased, or that the actual price increases are much smaller than WAC prices reflect,” the report says.



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