Prescription Drug Rate-Setting Bill Dies on Sine Die
By Samuel Manas
As the clock ticked closer and closer to midnight Monday, things looked bleak for the Drug Cost Commission bill that had made its way the House of Delegates just a week before. The bill, already pared down on its journey through the House, would have created a commission to explore the cost and accessibility of prescription drugs in Maryland.
But on Sine Die – the last day of the year’s legislative session – things move quickly, and a lot of bills come to the floor. This time, the drug cost commission wasn’t one of them.
The day after, advocates were picking through the rubble.
“It was out of time, there was just no time left,” said Maryland Citizens’ Health Initiative President Vincent DeMarco. “But there’s a strong desire to do this in the legislature.”
But not everybody cited time pressure as the main factor.
“The bottom line is that PhRMA killed the bill,” said Del. Joseline Peña-Melnyk (D-Prince George’s), the measure’s chief sponsor.
The legislation would have created two entities. The first was a Drug Cost Commission with five members appointed by various elected officials. It would have been tasked with collecting information on drug pricing and distribution in Maryland, assessing information collected from industry stakeholders and comparing the cost of drugs internationally.
The second was an advisory council of pharmaceutical industry representatives, consumer advocates and others the commission deemed necessary. It would have provided input on commission findings. The commission was to then author a report every year until its dissolution in 2021 recommending measures to improve access to affordable medications in the state and ways for the United States to lower the cost of prescription drugs.
The commission was originally intended to serve as a regulator and rate-setter for prescription drugs and was required to investigate the cost of any drug suggested by a citizen. Manufacturers that charged too much or introduced a drug that exceeded the commission’s cost thresholds would have been forced to reimburse those negatively affected by the drug’s cost. Those that didn’t comply could have been disciplined by the state attorney general.
Then came compromise and alterations in the House Health and Government Operations Committee. With time, a new version of the commission took shape: an advisory body issuing annual reports on the cost of prescription drugs in the United States and in Maryland.
The bill had fewer teeth: its regulatory powers had been stripped, manufacturers were no longer required to report new prices, and its focus shifted from pharmaceutical manufacturers to all stages of the drug supply chain. It even had a new name, its current one, previously having been called the “Drug Cost Review Commission.” It received unanimous approval from the committee and near-unanimous approval from the House.
The bill was still being deliberated on the last day of the legislative session in the Senate Finance Committee, with some legislators raising concerns about the cost and timeline of the commission and suggesting amendments. Lobbyist Josh White, representing the Pharmaceutical Research & Manufacturers of America, raised two concerns: first, that sharing of information about drugs across state lines, as the bill required, could reveal confidential information; second, that the expedited timeline of the bill made it difficult for manufacturers to review the reports issued by the commission before the legislative session began.
In the Senate hearing, Peña-Melnyk described it as a uniquely bipartisan effort, reacting sharply to the prospect of further amendments.
“At this point, if we were to do what is being suggested, the bill will simply die,” she said.
She was right: amendments would have sent the bill back to conference committee, and on Sine Die there probably would not have been enough time to hammer out a deal.
“I believe that this is something really important, where the money should follow the policy, not the policy should follow the money. This is a number one issue for a lot of people in the state of Maryland,” she said. Cost concerns, she added, could be addressed next session.
Despite near-unanimous approval by the Finance Committee to move the bill forward without additional amendments, the bill failed to reach the Senate floor in the waning hours of the session.
While she said she was “grateful” for the willingness of drug manufacturers to offer suggestions for improving the bill, Peña-Melnyk was disappointed. The generic manufacturers’ lobbyists had dropped their opposition, she noted—why couldn’t the name-brand manufacturers? “We did everything that they requested,” she said.
Expenditures on drugs continue to increase year-over-year in the U.S., as do the retail costs of drugs for consumers. Spending on prescription drugs is expected to increase at a more rapid rate on average than spending on health expenses through 2025, according to a General Assembly analysis.
Americans have long paid significantly more for prescription medications than people in other developed nations. Medication price controls are practiced in many nations – Peña-Melnyk noted that even the Republic of Colombia has rate-setting commissions for drug manufacturers – but the U.S. allows its drug prices to be determined by market dynamics.
“It’s the same company, they use the same money to be able to do the research and then get the patent, and they have the same expenses. But in the U.S., we spend more money on drugs than other countries, we spend more money to treat people than other countries, with results that are not as impressive,” she said.
There is momentum in state governments to regulate large price. In 2017 California passed a law requiring the disclosure of documents justifying large price hikes from pharmaceutical manufacturers. Other states, including Washington, Oregon, Massachusetts, New York, Tennessee and Michigan have considered drug price transparency laws in 2017 and 2018.
Peña-Melnyk and other advocates for the bill cited those laws as precedent for creating a drug cost commission and noted that drugs bought through Medicaid and Medicare Part D already go through a rate-setting process that results in medications costing less than their over-the-counter price to consumers.
The Maryland Citizens’ Health Initiative’s Health Care For All coalition, the bill’s primary advocates, has long proposed legislation to bring prescription drug costs down in Maryland, with the Drug Cost Commission being one of their most recent attempts. Last year one of their efforts, a bill regulating “unconscionable” price hikes by generic drug producers, became law without Gov. Lawrence J. Hogan Jr.’s signature.
The governor cited concerns about that bill’s constitutionality and noted that patented and name-brand pharmaceuticals were a large portion of the market, and often were the most expensive drugs. The coalition agreed, returning this year with the drug cost commission and other bills.
The legislature sent another coalition-driven bill to the governor’s desk this year banning the use of “gag rules” put in place by some pharmacy benefits managers. Gag rules are a tactic sometimes used by benefits managers to prevent pharmacists from informing customers as to whether a specific drug is cheaper when paying by cash in whole, as opposed to paying through insurance.
“There’s people every month that have to make decisions of whether they pay their mortgage or rent, or buy food or their medication – that breaks your heart,” Peña-Melnyk said.
“We’re pleased that they passed the ban on the gag rule, that was good progress this year,” DeMarco said. “We would have loved [the drug cost commission] bill to pass and we were hoping it would, but the fact that the House virtually unanimously passed it and it came so close in the Senate shows that there’s a strong desire in the legislature to do something on this issue. We’re going to be back, we’re going to continue mobilizing our coalition, we’re going to continue to spread the word and we’re going to get this done.”