Dive Brief:
- Several states, including MA, CA, NY, NC, OR, PA, and TX, have introduced legislation to force drug companies to become more transparent about development costs and drug prices in an effort to curb medication costs.
- In a survey conducted by the Kaiser Family Foundation, 72% of those surveyed said that they feel prescription drug prices are too high.
- Among all of the states undertaking this initiative, MA has the most aggressive, including proposed price caps.
Dive Insight:
States who are taking on drug prices are looking for full disclosure of the underlying costs associated with drug research, development, manufacturing and marketing. They want to know what the relationship is between those inputs and the actual costs of the drugs. In addition to demanding transparency, some states are pushing for price caps as part of initiatives, which are supported by patients, employer groups, hospitals and physicians.
On a national legislative level, Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.) have been asking drug companies for more information for months—to no avail. In fact, the pushback from industry has been strong, bolstered largely by a lobbying effort that has already cost almost $125 million this year, according to information from Open Secrets.
In short, the response from industry, via the Pharmaceutical Researchers and Manufacturers of America (PhRMA), has been that determining R&D costs is difficult when it comes to a single cost, because so many approaches are tried. In addition, drug companies feel that the cost of pharmaceuticals and biologics are offset by money saved when patients are able to avoid hospitalization or expensive procedures.
This story is far from over, as states have taken this matter into their own hands and have a great deal of support from numerous stakeholders, including America's Health Insurance Plans, a health insurance lobbying group.