Drug Laws Create Animosity Between State Governments and Pharma

Shortly after Donald Trump won the White House, one of the more widely accepted concepts he pitched was going after high drug prices. The president hasn’t been able to deliver on that front yet, but that doesn’t mean reining in prescription drug prices is a dead issue.

State lawmakers have seen to this by considering, proposing, and in some cases passing laws designed to improve transparency and/or prevent costs from spiraling beyond affordability. Maryland, California, and Nevada are among the states that have acted in 2017.

Maryland’s law took effect October. 1, 2017, and prevents drug companies from participating in price gouging, an increasingly controversial practice involving a rapid price increase not justified by production or manufacturing costs.

In California, Gov. Jerry Brown signed a law in October 2017 that requires drug manufacturers to provide 60-day notice if prices are raised more than 16 percent in a two-year period. It also requires insurers to file annual reports outlining how drug costs impact premiums.

Nevada Gov. Brian Sandoval signed legislation in June 2017 that requires makers of diabetes drugs, as well as pharmacy benefit managers, to disclose certain cost and profit information if prices are raised by a certain amount.

Predictably, these laws have been met with staunch resistance by the pharmaceutical industry. NPR reports that drugmakers have spent $16.8 million on lobbying since January 2015 to kill any California legislation that could affect drug prices. Two influential pharma trade organizations, PhRMA and BIO, have sued Nevada over its law. And in Maryland, the Association for Accessible Medicines, which represents the interests of generic drugmakers and distributors, filed suit and sought a preliminary injunction. The latter action was turned down by a judge who stated an injunction should only be granted if there is irrefutable support for it.

Maryland didn’t even have the support of its governor for its law. The state’s Democrat-heavy General Assembly passed it, and Republican Gov. Larry Hogan allowed it to become law without his signature. The judge handed a victory to Maryland Attorney General Brian Frosh with his September 2017 ruling against the injunction, and the AG is expected to move forward with cases brought to his attention by concerned consumers.

With several other states considering transparency and anti-gouging laws, the rhetoric between state governments and pharma is sure to intensify. While $10,000 fines may not mean much to a company’s bottom line, the negative publicity and the ability of state lawmakers to control price mechanisms should have pharma concerned.

Chris Silva is a senior analyst at DRG and specializes in information technology, telehealth and big data, among other topics. Follow him on Twitter at @ChrisSilvaDRG

 

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