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Bipartisan bill addressing prescription drug price transparency goes to Gov. Walz

pill bottles
Photo by Haley Lawrence on Unsplash
The bill requires pharmaceutical companies to report pricing information to the state when those prices exceed increases set out in the bill.
A bill to address prescription drug price transparency — two years in the making — was sent to Minnesota Gov. Tim Walz Saturday, marking another example of how the high price of pharmaceuticals has become a bipartisan issue.

The bill, Senate File 1098, requires pharmaceutical companies to report pricing information to the state when those prices exceed increases set out in the bill. The bill also requires the Minnesota Department of Health to post the information on a public website.

The bill passed the House 99-33 after passing the Senate 63-2 last month. The provision had been included in a health omnibus bill in 2019 but had been removed when the bill went in conference committee over pharmaceutical industry concerns about trade secret violations. Though changes were made to be more protective of industry secrets, drug manufacturers still opposed this year’s legislation.

Rep. Kelly Morrison, DFL-Deephaven, said the bill is meant to draw attention to big price increases and give both the state and patients information with which to take action.

“These are life-saving or sustaining drugs,” said Morrison, who is also a medical doctor. “Patients can’t choose whether they want to buy these drugs. They can’t shop around for a better deal. They need them to live.” 

She said prescription drug prices play a major role in the increasing costs of health care in the United States and that taxpayers bear much of the burden via the costs of government health programs.

State Rep. Kelly Morrison
State Rep. Kelly Morrison
There was opposition to the measure, however. “I know the pharmaceutical companies are not a bunch of white knights,” said Rep. Glenn Gruenhagen, R-Glencoe, who was a cosponsor of the bill before eventually asking to have his name removed. “The more I looked into … the bill, and also talking to my local independent pharmacies, I realized this was an over-regulatory step that might actually hurt patients and restrict access to drugs.”

Gruenhagen said he also thinks the bill is a step toward a single-payer health insurance system.

The bill takes effect in October 2021 and covers three class of prescription drugs: those that are $100 or greater for a 30-day supply (or $100 for a course of treatment lasting less than 30 days); brand name drugs that have increased in price by 10 percent or more over the previous 12 months (or 16 percent or more over the last 24 months); and generic drugs that have price increases of 50 percent or over the previous 12 months.

The report from the drug maker must include: an explanation for the price increase; the name of any generic versions; the price it was sold at when the drug was first approved by the Federal Drug Administration; the costs of making, developing, marketing and distributing the drugs; the net profit from the sale of the drug in the previous year; the price charged in other countries; and the amount of financial help the company provides to patients who can’t afford the drug under their patient assistance programs.

Companies that fail to follow the law face fines of up to $10,000 per day.

The bill was supported by a broad coalition of entities, including health care providers and trade groups, the AARP, local governments, labor unions and business groups such as the Minnesota Business Partnership.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the trade group for the nation’s brand-name drug makers, opposed the bill, saying it would require burdensome reporting, would not help patients, could chill drug innovation and could threaten access to needed drugs.

“It is important to note that medicines are the only part of the healthcare system where costs decrease over time,” PhRMA wrote in a letter sent to lawmakers. That is, legacy drugs are eventually available as generic versions, with some 90 percent of U.S. drugs being generic versions of formerly brand names medicines, the group said.

State Rep. Glenn Gruenhagen
State Rep. Glenn Gruenhagen
The industry points at costs charged by insurance companies and middle-men known as pharmacy benefit managers. It also called once again for legislation to require that rebates paid by drug companies to insurers and pharmacy benefit managers be passed to consumers. “Instead these rebates are going to the plans and other supply chain stakeholders,” PhRMA wrote.

The bill offers another example of bipartisanship when drug prices are the issue. The prime sponsor in the Senate is Sen. Julie Rosen, a Vernon Center Republican who chairs the influential Senate Finance Committee.

“Health care costs are still the number one issue on people’s minds,” Rosen said on April 20, when her bill passed the Senate. “Even in the midst of this COVID pandemic, there is rarely a day that I don’t get a call or email from someone worried about how they will afford their medicine.”

“It is unconscionable that someone’s prescription can double in one-months’ time without an explanation,” Rosen said. “Consumers deserve transparency and accountability from the pharmaceutical industry.”

The drug transparency bill follows the passage of a bill to require drug companies to provide emergency insulin to diabetics unable to afford it and by one year the passage of sweeping regulation of pharmacy benefit managers as well as a bill to set fees on drug makers to pay for efforts to combat and treat opioid addiction.

Comments (6)

  1. Submitted by Dennis Wagner on 05/11/2020 - 09:34 am.

    Personally I think Pharma brought this on themselves. In general one would prefer that companies become self regulating, in reality they can’t resist price gouging where they can, And then when they get blow back its woe is me. Try paying attention to your customers instead of trying to bankrupt them or let them die off because they can’t afford your product , and they can’t afford it because, your CEO and senior staff are making $10’s-100’s M a year, top 4 listings of CEO’s, $128.58M combined! Sorry no crocodile tears from this end.
    https://graphics.wsj.com/table/CEOPAY_slice_Pharma_0606

  2. Submitted by Ray Schoch on 05/11/2020 - 09:53 am.

    “The industry points at costs charged by insurance companies and middle-men known as pharmacy benefit managers. It also called once again for legislation to require that rebates paid by drug companies to insurers and pharmacy benefit managers be passed to consumers. “Instead these rebates are going to the plans and other supply chain stakeholders,” PhRMA wrote.”

    As an old guy with several health issues, one of my fervent hopes is that what Mr. Gruenhagen fears actually comes to pass. The quote above, from an industry source, no less, is a fine illustration of why. A profit-based health care system, where everybody has to take a cut before whatever is being delivered actually reaches the patient who needs it, doesn’t just encourage greed, it makes huge segments of the health care industry into leeches, who add little or nothing of value to the patient’s health, but significant value to the quarterly dividends of shareholders.

    The sooner we abandon the current travesty, wherein employees are dependent upon their employers for their healthcare, and employers find themselves saddled with administrative costs they’d much prefer not to deal with, the better off both employees and employers will be. A government-run, or at least government-regulated, single-payer system would benefit virtually everyone except current health care plan executives. That’s a plan I could enthusiastically endorse.

  3. Submitted by Bill Davnie on 05/11/2020 - 11:24 am.

    Big PHarma tends to be a highly partisan issue – R vs. D – at the national level. Why doesn’t it have that same partisan dimension here in Minnesota? There’s some division, I know, but this bill is inconceivable in DC, I think.

  4. Submitted by ian wade on 05/11/2020 - 05:26 pm.

    Gotta love the irony that the usual “over-regulatory step that might actually hurt patients and restrict access to drugs.” meme always comes from the party that continues to run on taking away healthcare from millions of people.

  5. Submitted by Jim Spensley on 05/11/2020 - 08:57 pm.

    The Part D Medicare insurance plans (as well as most health insurance policies covering medications) violate basic contract law. A Part D plan is a 3-way deal: for a year (the contract term) the Iinsured Senior’s Part D payment (Premium) is redirected to the Insurer.

    Each contract (insurance policy) is marketed as annual and includes a “formulary” (list of prescribed drugs covered). Most older people (and many people with chronic conditions) a lot of prescribed Drugs daily –more or less –and and are required to pay a part of the cost not paid by Medicare. The insurance companies advertise co-payments medication by medication, but the amounts are oganized by “tiers” supposedly based on costs and the acturial risk.
    An elevated tier placement increases the co-pay, but if your dose (use) of the drug is below average, same co-pay as the “normal dose,” .

    1. The costs basis can change during the year. If Medicare begins to allow a higher cost (from the supply chain, manufacturer, distributor, pharmacy) it allows only the negotiated cost and the Insurer moves the drug up a tier or two during the same contract year.
    2. The insurance company usually uses a third-party reviewer to decide the usual use (dose). The review company, in my experience, second-guesses the prescriber and or the phamacist (or the diagnosis) and, for example, charges a 2x co-pay for twice-a-day meds usually dosed one-a-day. Or if a drug usually used for one condition is occasionally prescribed to treat another, it is not offerred as a (no co-pay) generic if prescribed by Brand.

    I think it is good that State Government will be getting cost information.
    Perhaps that can be used in a criminal fraud investigation of my insurance contractor and its third party reviewer. So do my Doctors who waste time defending their diagnoses and treating patients who were given a half-dose of there medications …

  6. Submitted by Pat Terry on 05/12/2020 - 10:17 am.

    This bill doesn’t stop price increases – it merely requires disclosure of those increases. And the pharma groups are still complaining that it will hurt patients? That it will limit innovation?How do they make those arguments with a straight face?

    If requiring that accurate and truthful information be disclosed puts your business model in danger, there is something seriously wrong with your business model.

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