PhRMA Wins Most Battles Against States' Price Transparency Laws

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By Adrianne Appel

July 22 — A high-profile Massachusetts drug price transparency bill appears headed for the legislative graveyard.

With just days to go before lawmakers were set to adjourn for the year, on July 31, the bill had not seen a vote.

If it fails, it would join about a dozen similar bills introduced in legislatures by consumer advocates in 2015 and 2016, sometimes with help from the insurance industry. The bills were fiercely opposed by the pharmaceutical industry.

Bills Shopped Around

“This started happening a year-and-a-half ago. We started seeing this language being shopped around different state[s] about price transparency,” Priscilla VanderVeer, Pharmaceutical Research and Manufacturers of America (PhRMA) spokeswoman, told Bloomberg BNA in an interview June 28.

Just one bill, Vermont's, made it into law. That law made Vermont the first state to require greater transparency from drug manufacturers when they increase prices of prescription medications (108 HCDR, 6/6/16).

A bill in California (S.B. 1010 25-10 ), passed the Senate June 1 and was expected to be voted on by the Assembly by Aug. 31. And ballot measures to control drug prices in California and Ohio are expected to come before voters in 2016 and 2017 respectively.

The bills generally require pharmaceutical companies to reveal some of their costs related to drug development and advertising.

Health Insurers Favor Efforts

“Transparency is a first step toward making prescription drugs more affordable to patients,” Clare Krusing, spokeswoman for America's Health Insurance Plans, told Bloomberg BNA in an interview July 6.

PhRMA argues that the bills don't fully consider the costs of drug development and post-market surveillance, and the value and savings drugs bring to society, VanderVeer said.

“None of these bills get at the affordability question for patients. None of these bills get to a solution on that. It’s a huge oversight,” VanderVeer said.

Transparency and Price Control in Massachusetts

The Massachusetts bill (S. 1048) is a sweeping measure that includes price transparency requirements as well as drug price control mechanisms.

In a legislature known for passing controversial bills in the middle of the night, proponents held out hope that the transparency bill might pass in the final hours of the session.

“I wouldn't say it's dead. It needs a major push to make progress,” Brian Rosman, director of government relations for Health Care for All, a Massachusetts consumer advocacy group, told Bloomberg BNA in an interview June 27.

Health Care For All, along with MassPIRG, a consumer advocacy group, joined forces with the Massachusetts Association of Health Plans, a health insurance industry group, to push for the bill.

Coalition With Insurers

“It's not often that a consumer group would work with insurers. But we did it,” Deirdre Cummings, legislative director of MassPIRG, told Bloomberg BNA June 27.

Insurers in Massachusetts are bound by law to keep their spending growth below an annual state benchmark. Pharmaceutical companies are exempted, and insurers think that is unfair. The bill would change that, Lora Pellegrini, CEO of the Massachusetts Association of Health Plans, said.

High prescription drug prices are driving up costs for insurers and patients, Pellegrini said.

“I would ask, are you comfortable with the type of profits PhRMA is getting?” Pellegrini said at a Boston University panel discussion on drug prices, held March 25.

R&D Costs

The transparency bill would put the pharmaceutical industry on notice that if its companies want to charge high prices, they need to justify them, Pellegrini said.

“Let's let it all hang out and understand what they pay for R&D,” Pellegrini said.

The bill was introduced and advocated by state Sen. Mark Montigny (D), the powerful vice-chair of the Joint Committee on Health Care Financing.

“We as a state government spent $1 billion in 10 years on biotech. So treat us as venture capitalists. We want to know this information and I'm asking PhRMA to tell us,” Montigny said during an April 11 hearing by the committee.

PhRMA Lobbying

At the hearing, other legislators also voiced strong support for the bill. But the bill never saw a vote by Montigny's committee and is now languishing in the Senate Rules Committee, which he also chairs. Montigny declined to be interviewed by Bloomberg BNA for this story.

State lobbying reports show that consumer advocates were far outgunned by the pharmaceutical industry on the bill.

Twenty-seven pharmaceutical companies, plus PhRMA and the Massachusetts Biotechnology Council, lobbied against the bill during 2015, according to the latest reports filed with the secretary of state's office. Just two people from MassPIRG and two from Health Care for All lobbied for the bill in 2015, the reports show.

Important Biotech State

“We were certainly engaged in Massachusetts. We spoke a lot to the media and the [legislature],” VanderVeer said.

“Massachusetts is a critical state for the biotech industry. Many of our companies have headquarters or major research operations there,” VanderVeer said.

If the bill fails, advocates will introduce it again next year, Pellegrini said.

PhRMA was able to flex its muscle in Massachusetts, but in Vermont, that power didn't seem to matter.

Vermont Bill Passed

Despite industry lobbying in Vermont, the governor signed a strict drug transparency bill into law (Act 165) on June 2.

“We worked very hard in Vermont to try and educate the legislature there. They chose to believe a false narrative that drug costs are the leading driver of health costs. And they are not. Unfortunately, that led to the legislation,” VanderVeer said.

“What we kept hearing was that bills had been introduced in state legislatures and gone down in failure because of the intense pressure of lobbying. Honestly, I'm not sure how we escaped that,” state Rep. William Lippert (D), chair of the Vermont House Committee on Health Care, told Bloomberg BNA in an interview June 28.

Ineffective Lobbying?

Part of the reason was that PhRMA's lobbying was ineffective, Lippert said.

“Nobody thought the testimony from PhRMA was compelling,” Lippert said.

The bill certainly seemed vulnerable. Lippert brought a bill to the House floor that would have required companies to reveal their research and development costs. There was so much disagreement about it that he pulled it back to committee.

“We decided to take a lot more testimony,” he said. Afterward, there was broad consensus among committee members that something had to be done about soaring prescription drug prices, Lippert said. This was no small feat, given that committee members ranged from conservative Republicans to progressive independents.

Compromise Bill

In a crucial strategic move, Lippert handed the bill to the leading progressive on the committee and asked him to work with the Republican members to come up with a compromise proposal.

The resulting bill required that manufacturers of the 15 most costly prescription drugs submit documents to the attorney general to justify the higher prices. Health insurers also must inform policy holders how much they will pay in out-of-pocket costs for drugs.

“I'm under no pretense it will solve this issue. I'm hopeful it's a step forward,” Lippert said of high drug costs.

Ballot Measures

PhRMA has gone all out in its lobbying against the California bill and ballot measures in California and Ohio.

The ballot measures would require state agencies to pay no more for drugs than the discounted prices paid by the federal Department of Veterans Affairs. Both are sponsored by the nonprofit AIDS Healthcare Foundation. However, the Ohio measure won't make it to the ballot this year.

PhRMA's litigating in Ohio delayed the signature gathering of proponents, so proponents abandoned their quest to place the ballot measure before voters in 2016. They instead were gathering signatures for 2017 (131 HCDR, 7/8/16). PhRMA is gearing up too.

“We anticipate that a number of Ohio organizations will unite to educate Ohioans about the many problems with this proposed policy and the negative impact it could have on Ohio citizens,” VanderVeer said in a July 8 statement.

California Opposition

PhRMA has succeeded in creating a robust opposition campaign against the California ballot measure. By the end of May, PhRMA had spent $68.4 million opposing the California ballot measure, Proposition 61.

It also had lined up more than 100 organizations, including consumer and medical groups, to oppose it, said Kathy Fairbanks, a partner with Bicker, Castillo & Fairbanks who is the spokeswoman for Californians Against the Misleading Rx Measure.

“We're connecting with groups and saying, ‘We think you ought to take a look at this initiative. We don’t think it's going to work the way proponents say it will work,'” Fairbanks told Bloomberg BNA in an interview July 13.

To contact the reporter on this story: Adrianne Appel in Boston at aappel@bna.com

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

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