Colorado Lawmakers Mulling Drug Price Transparency Bill

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By Tripp Baltz

Feb. 22 — Colorado lawmakers are considering a bill (H.B. 1102) that would require drug manufacturers to submit a report to the state on the cost of producing prescription drugs.

The measure, Drug Production Costs Transparency Requirements, was heard by the House Health, Insurance and Environment Committee Feb. 18. It would require that drug manufacturers 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 os $50,000 or more per year or per course of treatment. The committee will vote on the bill at a later date.

The bill is the latest attempt by a state to require the pharmaceutical industry to provide information about what goes into pricing of prescription drugs. State Rep. Joann Ginal (D), chief sponsor of the legislation, said similar bills in four other states failed, and if approved, the Colorado proposal would be the first.

‘Reasonable Approach.'

“Unlike most every other sector of the health care industry, pharmaceutical manufacturers remain free from public reporting and price transparency,” Ginal said. “This bill offers a reasonable approach towards understanding the underlying costs behind production drug prices.”

At a Feb. 18 news conference, Ginal said she formerly worked in the pharmaceutical industry and knows “that lives are saved and improved through drug research and development.” However, she said, “I cannot stand by as much-needed medication becomes increasingly out of reach for people most in need.”

The bill would direct the commission to develop a reporting form that would capture 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.

The form would also capture information on marketing and advertising costs; costs paid by other entities, including grants, subsidies and other support; the history of prior price increases; profit attributable to the drug; and financial assistance provided through patient prescription assistance programs.

Opposition

Leah Lindahl, vice president of the Colorado BioScience Association, urged members of the House Health, Insurance and Environment Committee to vote down the bill.

“Bioscience is not like other undertakings,” she said. “Researching and developing new cures is research intensive and highly unpredictable, with many failures along the way. Since science is not linear, determining the costs of research and development for one product would be impossible or inaccurate at best.”

Joining Ginal at the news conference and supporting the bill was Tim Gaudette, Colorado outreach manager for the Small Business Majority. He said the bill deserves support because it will bring “more transparency and accountability to the pricing of specialty drugs” in the state.

A 2015 Congressional Research Service report says that although there is no commonly accepted definition of specialty drugs, “insurers and other health care payers generally characterize them as expensive prescription products requiring extra handling or administration (such as injection or infusion) that are used to treat complex diseases including multiple sclerosis, cancer, and hepatitis C.”

Other States

Drug pricing efforts are advancing in other states.

In Ohio, a proposal that would require state agencies to negotiate lower drug prices was sent by Ohio Secretary of State Jon Husted (R) to the Legislature Feb. 4. The proposed Ohio Drug Price Relief Act is a citizen-driven ballot initiative calling for state programs to pay the same, or less, for prescription medications as the U.S. Department of Veterans Affairs .

Supporters of a similar measure in California recently submitted signatures to qualify the initiative for the November 2016 ballot. They say the proposed California Drug Price Relief Act would save the state 20 percent to 24 percent in pharmaceutical costs.

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