What Do Drug Pricing Transparency Laws Mean for You?

dollar bills and prescription bottles
Roni Shye
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Drugs are expensive, and prices seem to only be increasing. You’ve probably heard of the conflict surrounding popular drugs like Epipen and Daraprim, who each saw large price hikes overnight.

These price increases, among others, have shed necessary light on price hiking and transparency, and have caused many states to take this matter into their own hands. At the moment, 23 states are stepping up their efforts on drug pricing by proposing bills that take on the rising cost of drug pricing.

What is drug pricing transparency?

First off, it’s great for your pocketbook. Drug pricing transparency would require pharmaceutical companies and middlemen (like pharmacy benefit managers) to be less secretive about the actual costs of their medications.

Who would benefit?

Essentially everyone, minus those with a hidden agenda. Providing drug pricing will ensure affordable and accessible prescription drugs for consumers.

What’s going on in California?

Exciting things! Governor Jerry Brown just signed the SB-17 drug transparency bill. This bill requires that pharmaceutical companies give the state of California 60 days notice anytime they plan to raise the price of a drug by 16% or more over 2 years. The companies would also have to explain why the increases are necessary. In addition, health insurers would have to report what percentage of premium increases are caused by drug spending.

California also has another bill, AB-265, which would prohibit drug companies from offering coupons and other discounts to brand-name drugs that have an alternative cheaper generic available. This bill has yet to get to the governor but has passed in the Senate.

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And Vermont?

Vermont passed a bill in 2016 that requires pharmaceutical companies to provide justification for drug price hikes.

Each year the Green Mountain Care Board in collaboration with the Department of Vermont Health Access identifies drugs that have experienced price hikes by 50% or more over the past five years, or by 15% more over the past 12 months. For drugs that have experienced increases, the state can fine the pharmaceutical companies.

What about Nevada?

In June, Nevada passed a bill that focuses solely on the cost of diabetes medications. However, it is currently facing lawsuits from pharmaceutical lobbying groups, as they claim that it is unconstitutional and possibly violates patient rights. More to come on this!

What’s going on with the bill in Ohio?

The Ohio Drug Price Act is an initiative that aims to cut pricing. Or does it?

This act would mandate that the state agencies pay no more for prescription drugs than the U.S Department of Veterans Affairs, which typically gets a 24% discount on the price of drugs from pharmaceutical companies.

However, this bill does not apply to those with private health insurance; therefore, if passed Ohioans insured through their employers could actually see drug prices go up in order for the drug companies to regain the money lost from selling to certain buyers at a lower rate.  A similar bill in California flopped just last year!

It seems like more bills are being proposed every day. Stay tuned, we will keep you in the loop.

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