Stakeholders Debate the Merits of Drug Pricing Legislation

Addressing the rising cost of drugs in the United States has become a problem that many entities and stakeholders are hoping to solve. From the federal government down to the state level, everyone seems to be taking the problem into their own hands.

Jack Conway, former attorney general of Kentucky, kicked off a panel at the Association for Accessible Medicine’s (AAMs) Access! 2019 annual meeting entitled “50 States of Mind—Do You Understand How State Policies Affect Your Business?” by explaining that, though there are many things happening at a state level that can affect various stakeholder businesses, “the average policy maker simply doesn’t understand all of the different forces in the market.”

According to Conway, while greater transparency within the healthcare sector is largely touted as a positive thing, “Each state writing their own transparency laws creates a patchwork system of different laws across the country.” There are, he said, 40 to 45 transparency bills “out there right now, creating costs that pharma companies will largely have to bear the cost of.”

His recommendation to stakeholders? Get involved in your own states. “Things are happening at the state level that need to be addressed, and you need to give input because it’s affecting your business.”

Conway’s kickoff segued into a panel moderated by Jared Hopkins, a reporter for The Wall Street Journal, who, opened the floor to other panelists to discuss some specific legislation they’ve seen.

Vincent DeMarco, president of Maryland Citizens’ Health Initiative, was a supporter of a controversial 2017 law that aimed to curb price-gouging in Maryland. The law, which passed in 2017, was eventually struck down by a federal appeals court in April 2018 after AAM filed a suit against the state, alleging that the law granted the state “unprecedented powers to regulate the national pharmaceutical market, violating the [US] Constitution and posing harm to vulnerable patient communities.”

Most recently, Maryland’s Attorney General Brian Frosh petitioned the Supreme Court to uphold the law. DeMarco is expecting the Supreme Court to determine in the coming weeks whether they will take the case or not.

In support of the bill, DeMarco explained that he saw it as “a good way to keep people from doing what Martin Shkreli did,” referring to the former drug executive’s price hike on an antiparasitic product. While that law primarily dealt with generic and off patent drugs, rather than brand-name price gouging, DeMarco and his organization are also looking to create a “prescription drug affordability board” that would have the authority to set an upper payment limit on what Marylanders will pay for drugs. “We believe this board is constitutional and will withstand challenges in court,” said DeMarco.

As a former Attorney General, Conway weighed in on the matter. “My problem with the Maryland bill is that Vinny is citing the Martin Shkreli case, and that drug wasn’t a generic. Branded drugs are the biggest problem [with price gouging], so why did this bill deal with generics?”

While Conway conceded that he understands market exclusivity and giving time for a brand to make its mark, “We need generics to come in and foster competition…to me, it seemed like this law was a sledge hammer when we needed a scalpel.”

However, not everyone on the panel agreed. Elizabeth Wright, director of health and science policy for Citizens Against Government Waste, said that “I don’t think any of these bills solve the problems. Vinny says [that law] isn’t a price control, but it sounds a lot like a price control to me. That doesn’t drive down cost. Competition does. What we need to do is figure out how to get drug applications through much quicker and actually bring those drugs to market. I think we bring down prices by more competition, not more government interference.”

While there are a range of ideas on how to address the high cost of drugs and the benefits or deterrents of different legislative action, Alex Brill, chief executive officer of Matrix Global Advisors, closed with one final point: “There is a common misconception in the pharmaceutical market that, for any given drug, there’s one price. We all know that there are multiple prices. From an economic perspective, those different prices are good things. The transparency agenda threatens to expose those multiple prices that exist across different contracts.”