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Regulatory Focus™ > News Articles > States Take on Drug Price Transparency, Gouging

States Take on Drug Price Transparency, Gouging

Posted 23 August 2017 | By Zachary Brennan 

States Take on Drug Price Transparency, Gouging

As the US Congress continues to highlight specific drug price increases rather than adopt wide-reaching legislation to curb such practices, states are taking the matter into their own hands.

In California, an Assembly committee on Wednesday moved forward a bill (SB 17) that would shine a spotlight on what the state spends on the most expensive prescription drugs, as well as which drugs have seen the highest year-over-year spending increases.

The bill, which passed the state Senate in May and is supported by AARP, Pharmacy Benefit Managers (PBMs) and CalPERS and opposed by industry groups BIO and PhRMA, also would require manufacturers to provide written notification prior to a price increase of more than 10% to each state purchaser, health plan or insurer and PBM.

Other measures under consideration in California include: SB 790, which prohibits a drug manufacturer or wholesaler from offering or giving a gift to a health care provider, AB 265, which prohibits manufacturers from offering discounts or other reductions in an individual's out-of-pocket expenses associated with insurance coverage if a lower-cost generic drug is available, and AB 315, which requires PBMs to be licensed by the Department of Managed Health Care (DMHC) and requires a PBM to disclose to a purchaser certain information.

Other States

In addition to California, Ohio is also seeing a heated debate over a November ballot measure, known as Issue 2, that would require the state and state agencies, including the Department of Medicaid, to pay the same or lower prices for prescription drugs as the US Department of Veterans Affairs, which typically pays 20% to 24% less than other agencies for prescription drugs.

Proponents of the Ohio measure, including Sen. Bernie Sanders (D-VT), have said it could save the state about $400 million per year.

Similarly, state House and Senate Democrats in Michigan earlier this week proposed a plan to create a Prescription Drug Consumer Protection Board that drug manufacturers would be required to submit documentation to justify price increases above 10% in one year, or 30% over five years. Manufacturers that refuse to submit such information would be subject to penalties and fines.

And Massachusetts is considering a bill that would develop a list of the top 20 most expensive drugs and require manufacturers to explain the total cost of production and research and development costs, among other costs.

Previous Measures

Louisiana, Nevada, Maryland, North Carolina and Vermont have all adopted measures aiming to increase transparency on drug prices or stop price gouging.

The Louisiana law requires each drug manufacturer or pharmaceutical marketer who engages in any form of prescription drug marketing to provide to the Louisiana Board of Pharmacy four times each calendar year the current wholesale acquisition cost for the approved drugs marketed in the state by that manufacturer.

Nevada Gov. Brian Sandoval signed into law in June a measure that would require insulin manufacturers to disclose the prices they set and provide written explanations of price increases.

Maryland’s new price gouging law imposes fines on generic drugmakers who hike the wholesale acquisition cost of their products by 50% or more in one year, or if the WAC is more than $80 or if three or fewer drugmakers are actively manufacturing and marketing the drug.

North Carolina’s law bans PBMs from prohibiting a pharmacist or pharmacy from providing an insured patient with information on the amount of the patient's prescription drug cost share and the efficacy of a lower-priced alternative drug if one is available.

And Vermont’s law, which has already seen some price gougers called out, exposes drugs and drugmakers that have hiked the prices of their treatments the most in the state.


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