With anger rising over high prescription drug prices and no federal action on the horizon, several states are taking action to force drug makers to open up their books to justify the high pricetags.
Various states introduced legislation calling for drug makers to disclose their research and development, marketing and other costs for particularly pricey products. Eight states have filed bills calling for more transparency: Massachusetts, California, Minnesota, New York, North Carolina, Oregon, Pennsylvania and Texas.
The bills strike at the heart of the pharmaceutical industry’s most common defense of high prices: that the money is needed to help recoup staggering research and development costs and time.
All of the bills were filed earlier this year, but so far none has advanced out of their respective legislative committees, said Richard Cauchi, health program director for the National Conference of State Legislatures.
Cauchi said it is too early to tell whether the legislation has a chance of succeeding or spreading to other states. He said it usually takes a year for state bills to become law.
He said some of the bills might be taken up next year in their respective legislatures.
The industry has fought such laws, saying that forcing disclosure of such costs may not be possible and wouldn’t help patients anyway.
“Research and development is long term, and manufacturers pursue research efforts that include many failures before the development of one FDA-approved drug,” said Holly Campbell, spokeswoman for the Pharmaceutical Research and Manufacturers of America. “Just 12 percent of drugs entering clinical trials ever make it to patients.”
Polls have shown that Americans are becoming more concerned with high drug prices. In recent weeks a public backlash erupted against 32-year-old CEO Martin Shkreli’s attempts to raise the price of a decades-old anti-parasite treatment by 5,000 percent.
However, there isn’t any indication that the federal government will do anything to rein in high drug prices. Presidential candidate Sen. Bernie Sanders, I-Vt., introduced a massive set of reforms but sources on the Hill say his bill doesn’t have much of a chance of advancing.
Of the state bills filed so far, Massachusetts’ goes the furthest.
It calls for disclosure of not only the research and development costs for a drug, but also how much money the company received from public grants, after-tax costs paid by the company and which costs were paid by third parties.
Marketing and advertising costs and the drug price for international countries also must be disclosed.
Massachusetts also stands out as it presents consequences for a drug that costs a lot. It calls for a pre-existing commission studying critical drugs to develop price caps for high-cost drugs sold in the state.
The bill’s supporters believe that the Shkreli scandal will help raise awareness of drug pricing.
“It is such an extreme example of a situation and a drug price that isn’t tied to the underlying manufacturing cost,” said Amy Whitcomb Slemmer, executive director of the state group Healthcare for All, which helped draft the bill.
By forcing companies to disclose their international prices and other costs, it could lead to lower prices, Slemmer said.
“The theory is that if the price of the drug is 10 times lower in France that there would be some movement towards cost parity in the U.S.,” she said.
A committee hearing on the bill is expected for later this fall, Slemmer added.
