Some state lawmakers are proposing to give the Insurance Department more teeth to tackle the problem of skyrocketing prescription drug prices.
House Bill 161 would require pharmaceutical companies to disclose the cost of drugs — including materials, research, clinical trials, marketing and advertising.
The bill is co-sponsored by Lancaster city Democrat Mike Sturla and Jim Cox, a Republican who represents part of northern Lancaster County.
The proposed law would apply if a drug’s wholesale price is more than $5,000 annually, or it costs more than $5,000 for one course of treatment. The law also would be triggered if the wholesale price increases more than 50 percent over five years or more than 25 percent over 12 months.
If drug companies don’t make such price disclosures, the bill proposes to authorize the Insurance Department to allow insurers to not cover certain drugs.
If lawmakers are successful, Pennsylvania could become only the second state in the nation, after Vermont, to attempt such regulation of drug prices.
Need for a law
Anthony DeLuca, a Democrat from Pittsburgh who introduced the bill, wrote in its memo, “As policymakers, I believe that, at a minimum, we need to provide consumers with information currently not available in terms of why prescription drugs cost so much.”
From 2014 to 2015, per-member prescription drug costs increased 57 percent in the individual market, according to Insurance Commissioner Teresa Miller, who testified in support of the Pennsylvania bill at a recent hearing.
Miller said there is “currently no mechanism to look at the issue of (drug) cost.” The proposed law would be an important first step in that direction, she said.
Industry lobby Pharmaceutical Research and Manufacturers of America opposes the bill, saying it would drive up administrative costs and disclose proprietary information.
Tara Ryan, vice president of state policy for the trade group, cautioned that the proposed law “could threaten access to needed prescription medications and the innovation of future treatments.”
She also said the bill overlooks the role that other entities — including insurers, pharmacy benefit managers and wholesalers — play in determining what consumers ultimately pay. According to a new report by Berkeley Research Group, Ryan said, the piece of total drug costs that goes to manufacturers has been declining, and now stands at 39 percent.
Pennsylvania Insurance Department spokesman Ron Ruman said it believes Vermont is the only state that has enacted similar legislation.
According to a report earlier this month in the Burlington Free Press, that law has yielded limited information, with confidentiality rules preventing lawmakers and the public from seeing details about specific drug costs or pharmaceutical companies.
Local lawmakers weigh in
The bill is currently in the House Insurance Committee, where the only local member is Rep. Steven Mentzer, a Republican from Lititz.
“Putting more government rules and red tape between a patient, their doctor and potentially lifesaving drugs that reduce the need for a hospital stay does not strike me as something government should be doing,” he said in an email.
Rep. David Zimmerman, a Republican from East Earl, had a similar response, saying, “While lowering the costs of prescription drugs is not something most folks would argue against, I can’t see how more government regulations would achieve that goal.”
Rep. Keith Greiner, a Republican from Upper Leacock, said in an email that he had not yet reviewed specifics of the proposal but would if and when it goes before the whole House.
“On one hand, it’s easy to see how this bill could actually cost the consumer more if insurance companies don’t cover the cost,” he wrote. “On the other hand, maybe it will help control costs.”
David Hickernell declined comment, as he had not read the bill.
Bryan Cutler, Ryan Aument, Scott Martin and Mindy Fee did not respond to questions from LNP.