Colorado House Panel Kills Drug Price Transparency Bill

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By Tripp Baltz

April 6 — The sponsor of a bill (H.B. 1102) to require drug manufacturers to submit a report to the state on the cost of producing prescription drugs said she will introduce the measure again next year, after a legislative committee killed the bill.

State Rep. Joann Ginal (D) told Bloomberg BNA April 1 the bill was the latest attempt by a state to require the pharmaceutical industry to provide information about what goes into pricing of prescription drugs. However, stiff opposition to the bill by the industry, as well as dissent from the state's leading bioscience association, prompted the House Committee on Health, Insurance, & Environment to kill it on a 12-1 vote March 10. Ginal was the lone supporter of the measure.

Ginal told Bloomberg BNA the issue is an important one to health consumers, and she plans to work with industry representatives to bring an improved bill to the Colorado General Assembly 2017 session. “When I came out of the committee hearing I went up to them and said, ‘I hope you guys know this isn't the end. I intend to work with you to make sure this is something we can all agree on.'”

During committee debate on the bill, representatives of the industry presented statements expressing their opposition to the concept. The bill, which Ginal introduced Jan. 19, would have required drug manufacturers to submit a one-time report to the Colorado Commission on Affordable Health Care outlining certain information about drugs made available in Colorado for which the wholesale acquisition cost is $50,000 or more per year or per course of treatment.

R&D Cost Reporting

Companies would have been required to provide information on drug research and development costs; clinical trials and regulatory costs; material, manufacturing and administration costs attributable to the drug; and acquisition costs, including patents and licensing. Ginal called it a “reasonable approach towards understanding the underlying costs behind production drug prices” .

However, she said, industry representatives told her the bill would “hurt them terribly.”

Frank Seagrave, president and CEO of Silvergate Pharmaceuticals Inc., said the bill would “only result in additional administrative costs requiring extensive reporting provisions that would provide absolutely no transparency to the public.” The resources the bill would require “would be better used to continue the efforts of the industry in creating new cures and treatments for patients and their families,” he said.

The reporting requirement “would place an undue burden on bioscience companies,” said Ralph Christoffersen, general partner with Lightstone Ventures, a life science investment team that manages a portfolio of more than 50 medical device and biotechnology companies. “It is also concerning that the information being requested could be proprietary in nature, impossible for companies to compose and offer no additional transparency for the consumer,” he said.

‘Inaccurate Calculation.'

When computing the costs of research and development into one medicine, companies must take into account the failure of several others, he said, “and failure to recognize the expense associated would result in an inaccurate calculation of the investment these companies are making.”

The resulting report would provide inaccurate information to the legislature “and ultimately offer no benefit to the patients we are trying to serve,” Christoffersen said.

Ginal said she “emphatically made certain” the bill would not result in companies giving away trade secrets. “I'm not trying to regulate them, I'm trying to get the information for consumers and policymakers to find out what's really happening with drug pricing.”

The bill has “run its course this year,” she said, but next year she will “start working with the various pharmaceutical companies and health insurance companies to look at why the cost of drugs is so high.”

Support From Health Plans

Testimony in opposition to the bill also was provided by Pfizer, PhRMA, the Colorado BioScience Association and the Liver Health Connection.

Testifying in favor were Kaiser Permanente, the National Federation of Independent Business, the United Food and Commercial Workers Union Local 7, Healthier Colorado, the Colorado Association of Health Plans and the Colorado Consumer Health Initiative.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

More information on the bill is available from the Colorado General Assembly at http://www.leg.state.co.us/CLICS/CLICS2016A/csl.nsf/MainBills?openFrameset.