Michigan Association of Health Plans

Bill would require pharma companies to report data on high-cost drugs

Originally published by MiBiz.

In 2014, the narcotic overdose treatment Naloxone cost $690. Today, the same drug sells for $4,500.

That’s just one example of recent dramatic drug price increases that a group of health care advocates in Lansing want to address on a statewide level. They’re backing new legislation that would require pharmaceutical companies to publicly report to the state information on what it costs to produce, distribute and market a high-cost drug.

In pushing for the legislation, advocates also cited the cost increases for an EpiPen — an allergic reaction treatment that costs $600 today versus $57 a decade ago — and cancer drug Gleevec, which went from $26,000 in 2001 to $146,000 currently.

“Pharmaceutical advances have brought life-saving medications that have improved treatment for many diseases, yet the rising costs of drugs threaten the sustainability of health care coverage for employers, patients and health insurers,” Karen Jonas, a pharmacy consultant for the Michigan Association of Health Plans (MAHP), told lawmakers during a recent legislative hearing on the bill.

Jonas cited a Kaiser Family Foundation analysis that showed drug costs have grown from 6 percent of U.S. health care spending in 1990 to 22.1 percent in 2017, and “they continue to rise.”

Christine Shearer, the deputy director of legislation and advocacy for the MAHP, a group that represents 13 health plans in Michigan that cover 2.4 million people, said the bill would “make the component of drug prices a matter of public record.”

The legislation, which is pending in the House Health Policy Committee, has the backing of the MAHP and Blue Cross Blue Shield of Michigan, as well as health care groups and business organizations representing employers, including the Grand Rapids Area Chamber of Commerceand the Detroit Regional Chamber.

Opponents include pharmaceutical companies and their advocates, as well as MichBio, the life sciences trade group in Michigan.

At the House Health Policy Committee hearing, Saumil Pandya of the Pharmaceutical Research and Manufacturers of America (PhRMA) argued the bill “doesn’t really capture the way medicines are priced, or the logic behind it.”

Pandya, PhRMA’s senior director for policy and research, would not defend the egregious examples of price increases cited during the hearing. Instead, he argued that pharmaceutical companies are bringing new drugs to market that are expensive but cure previously incurable diseases.

For pharmaceutical companies, research and development costs billions of dollars and often leads to failure, with only a handful of drugs making it to market, Pandya said. The companies price their drugs in an effort to offset those losses, he said.

“So when a company sets a price for a product that does launch — one of the very few that actually makes it to market — what they’re trying to do is not only recoup the research and development costs for that particular medicine, but for all the tries where they failed over and over again and they were not successful,” Pandya told lawmakers. “There is a need in a free market economy that we have right now for companies to be able to generate the headroom to create that innovation and to keep bringing these cures to the marketplace, and they’ve developed tremendous medicines.”

Stephen Rapundalo, president and CEO of the Ann Arbor-based MichBio, doubted the legislation would actually lead to lower costs. He worries it could hinder the state’s life sciences industry by diverting “scarce resources to accounting and compliance activities that could be better used on developing therapies that patients need.”

The legislation “threatens the entire biopharma industry in Michigan,” Rapundalo said.

Read the full story at: https://mibiz.com/item/25694-bill-would-require-pharma-companies-to-repo…