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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session


Posted: January 31, 2017 04:15 PM
From: Senator Donald C. White
To: All Senate members
Subject: Pharmaceutical Transparency
Soon I will be introducing legislation establishing the Pharmaceutical Transparency Commission to better educate consumers and payors about the components of prescription drug costs to ensure they are reasonably priced in relation to cost.

The bill seeks to address both affordability and access to critical medications and the challenge patients, providers, businesses, government health programs and insurers face with the rising costs of prescription drugs, especially the recent development of extremely expensive but valuable drugs. These drugs are wonderful advancements in improving health care and they may even reduce aggregate costs; at the same time, there is little information available to the consumer as to why they cost so much and almost no ability to negotiate price. Nothing holds down costs better than an informed consumer which is the goal behind the Pharmaceutical Transparency Commission.

The disclosures required in this bill are being introduced in states across the country, with support from employer groups, consumer advocates and health insurers. They include disclosure of a drug company’s costs for research and development, clinical trials and other regulatory costs, and advertising and marketing for a particular prescription drug. The bill also includes the disclosure of overall profits from the drug, as well as disclosure of the drug company’s assistance programs for patients. The transparency of these costs will allow consumers and payors to have informed negotiations with drug companies and ensure fair pricing and availability of prescription drugs.

The bill also establishes a benchmark for pricing prescription drugs, modeled on the medical loss ratio requirements that apply to health insurance. Under the bill, a reasonable price for a prescription drug would be one no more than 20% higher than the total costs, with the Commission able to set a higher percentage for a particular prescription if deemed appropriate. Insurers would be required to pay a reasonable price for the drug.

The Commission will be funded through an annual assessment on pharmaceutical manufacturers. It would consist of the Insurance Commissioner and the Secretaries of Health and Human Services, a pharmacist designated by the Pennsylvania Pharmacist Association, a consumer advocate designated by the Leukemia and Lymphoma Society, a physician designated by the Pennsylvania Medical Society and an insurance producer representative designated by the Pennsylvania Association of Health Underwriters.

We all appreciate the advances of these new drugs. We need to make sure the new drugs are affordable so their promise can be realized by all consumers. True transparency in their costs, a generous and fair guideline on their price, and equal access to medication is an efficient and balanced approach.

If you have any questions concerning this legislation please contact Carlton Logue of my staff at clogue@pasen.gov or 7-8724.

Introduced as SB637