[T]he Vermont House gave preliminary approval Tuesday to a bill that would require prescription drug manufacturers to disclose how they set their prices.
The bill would require health insurance companies on Vermont Health Connect to set up interactive websites that consumers can use to find out how much their prescription drugs will cost out of pocket.
Additionally, the bill would require the Department of Vermont Health Access to study how the Medicaid program can use a federal drug pricing formula called 340B to lower what the state pays for drugs.
The House approved the bill, S.216, unanimously in a voice vote, and no lawmakers asked questions on the floor. The current version is a hybrid of H.866, which the House has been taking testimony on, and an earlier version of S.216, which the Senate passed March 17.
“You can’t pick up a newspaper or turn on the television without seeing example after example of concerns being raised,” Rep. Bill Lippert, D-Hinesburg, who chairs the House Health Care Committee, said on the floor.
A final House vote on the new version of S.216 is scheduled for Wednesday. If the House passes the bill, the Senate can either approve the changes or ask for a conference committee to work out differences.
The most controversial language in the bill would require the Green Mountain Care Board to work with the Department of Vermont Health Access to identify up to 15 prescription drugs that the state’s Medicaid program spends significant amounts of money on, and drugs whose cost has drastically increased for the Medicaid program.
The board would then need to provide the list of these drugs to the attorney general’s office, which would in turn require the drug manufacturer “to provide justification for the increase in the price of the drug in a format the Attorney General determines to be understandable and appropriate.”
Manufacturers would need to provide “all factors that have contributed to a price increase,” say how much of the price increase is attributable to each factor, and explain “the role of each factor in contributing to the price increase.”
There are no penalties written into S.216 for manufacturers that choose not to comply with the attorney general’s requests for pricing information, and Republican members of House Health Care said in interviews that the committee is not imposing drastic reporting requirements.
However, the bill has still faced pushback. On March 30, a lobbyist for the Pharmaceutical Retailers and Manufacturers Association, also known as PhRMA, testified in House Health Care, saying the industry opposes price transparency legislation and that such legislation would drive up drug prices.
On April 11, PhRMA submitted written testimony saying pricing information may not be relevant to lawmakers because drug manufacturers do not sell directly to doctors and pharmacies in Vermont “and in many cases they are not privy to the final price paid in Vermont.”
PhRMA also said in written testimony that certain vulnerable populations of people get access to lower prices through special programs, and that price disclosure could “chill the incentive” that companies currently have to give special prices to those groups.
For example, the industry group wrote that veterans can get access to lower prices through the U.S. Department of Veterans Affairs, and a program called 340B, among other things, helps hospitals and community health centers provide drugs to low-income people.
But the bill goes further to ask the state to consider using the same 340B drug pricing formula. Sen. Michael Sirotkin, D-Chittenden, who sponsored the original version of S.216, said that if Medicaid used the same 340B drug pricing formula that hospitals and community health centers use, the state’s Medicaid program could save $400,000.
Lippert said that “there is always a possibility of being sued, especially by big pharma, which has infinite resources, and they don’t want to be in the business of explaining their prices.” But he called it “the nature of the work” and said, “I think there’s been some effort made to minimize that.”
Several other states, including Virginia, California, Massachusetts and New York, have considered similar legislation, according to Stat News. Measures in those states have faced opposition from PhRMA and others, according to Stat News.
The National Council on State Legislatures reports that more than a dozen states have introduced legislation requiring price transparency from manufacturers in the current legislative session, but none has been signed into law.
Indeed, none of the manufacturer transparency bills in the other states has gotten as far as Vermont’s, according to Richard Cauchi, the health program director at the National Conference of State Legislatures.
Rep. Robert Bancroft, R-Westford, said S.216 is about shining a light on pharmaceutical pricing that Republicans and Democrats agree is an issue. He also said it’s very unlikely the state could get sued because “there are no teeth” in the bill.
“If they comply, it’ll shine a light on it. If they don’t comply, it still shines a light on it,” Bancroft said. He said the state could say it “has identified these 15 drugs that have increased by these amounts, and the drug manufacturers have not wanted to comply with providing us any rationale.”
Rep. Anne Donahue, R-Northfield, who sits on House Health Care, also said her committee was “acutely aware” of the lack of success in other states, and that’s why members tacked language onto S.216, which could soon head to the Senate.
