- Maryland on Friday became the latest state to enact legislation aimed at thwarting indefensible hikes for the cost of drugs.
- Gov. Larry Hogan didn't sign House Bill 631, but he also didn't veto it — meaning it becomes law. Under the new legislation, generics developers suspected of price gouging an essential medicine must hand over to the state's Attorney General any relevant documents related to the cost of that product. If government officials determined price gouging took place, they can levy fines and restrictions on the manufacturer.
- While the legislation made it through the House and Senate in April with wide bipartisan support, Hogan had some hang ups about it, writing in a letter that the bill "only addresses the pricing of generic and off-patent pharmaceuticals, and does nothing to address the cost of patented products and medical devices which may be associated with drug delivery."
"This oversight, whether inadvertent or deliberate, is troubling since the patented or brand-name pharmaceuticals make up a significant amount of the market and are often times the most expensive and essential pharmaceuticals," Hogan added.
Hogan's reservations highlight some of the biggest questions hanging over state-level pricing transparency initiatives: are they going far enough, and will they even work?
Proposition 61, for instance, was a California ballot initiative meant to keep prescription drug costs in check by preventing the state from buying medicines at a higher price tag than U.S. Department of Veterans Affairs, which gets special, mandated discounts.
Proponents argued the legislation would prompt drugmakers to keep their products more affordable, or risk losing out on the multi-billion dollar California healthcare market. Naysayers, meanwhile, said the bill lacked the necessary provisions that would force pharmaceutical companies to come to the table. When it came time to vote in November, the nays won 54-46.
In many ways, though, Proposition 61 was just the beginning. Another drug pricing reform is working its way through the California legislation, and similar bills have also sprouted up in roughly a dozen other states, including Oregon, Washington and Illinois. In Nevada, a bill requiring diabetes drugmakers to let the state know about new price increases for essential medicines before they institute those hikes has passed the Senate and Assembly, and awaits a decision from Gov. Brian Sandoval.
Back in Maryland, HB 631 now gives Attorney General Brian Frosh more leverage over medicine makers whose products that either the World Health Organization or the state's Secretary of Health and Mental Hygiene has deemed essential. Those medications span a wide array of therapeutic areas, such as lidocaine for local anesthesia, dexamethasone for allergies and anaphalaxis, and amoxicillin as an anti-bacterial agent.
Should a pharmaceutical developers be found guilty of price gouging, Maryland officials can inflict several penalties, ranging from a $10,000 fine to requiring the drugmaker return the revenues it got through the cost increase to insurers and patients.
Though those penalties likely won't put much of a dent in the bottom lines of large pharmas, they're quite symbolic of the rough waters on the horizon. Pitted against poor public opinion and outrage from both Democratic and Republican lawmakers, drug companies are searching for ways become more transparent without giving too much power to state and federal regulators.