Vermont becomes first state with drug pricing justification law
- Vermont Gov. Peter Shumlin has implemented a law requiring state officials to identify drugs that rose in list price by 50% or more in the last five years.
- They must also identify drugs with list prices that rose 15% or more over the last 12 months.
- After the drugs are identified, the state attorney general must contact the drug makers to get information to justify the price hikes. Violations carry a $10,000 fine.
Many states have been threatening to implement such a law, and now Vermont has become the first state to do so.
"This bill is about accountability. The reality is that we have pharmaceutical companies raising prices on lifesaving drugs five thousand percent. When asked about those outrageous increases, CEOs are literally laughing in front of Congress. That needs to change,” Shumlin said.
In addition to dealing with the penalty, drug companies will also have to deal with the fact that all of the information will be publicly posted on a web site. Some have speculated that drug companies will attempt to circumvent this law by increasing prices just below the stated thresholds. Nonetheless, Vermont is setting a precedent, and in the process, making a powerful statement.