February 10, 2025

Senate Committee on Commerce and Labor
Senate Room A, GAB Floor 3
1000 Bank Street
Richmond, Virginia 23218

Dear Senator,

Today, the Senate Committee on Commerce and Labor will hold a hearing on HB 1724.  On behalf of the 42,040 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Virginia, I urge you to vote against this legislation, which would impose price controls on prescription drugs through the establishment of the Prescription Drug Affordability Board (PDAB).  Governor Youngkin vetoed similar price control legislation in 2024 and will likely do so again if HB 1724 reaches his desk.

Throughout history, price controls have distorted markets, hurt innovation, and exacerbated the problems they were created to fix.  HB 1724 would create a five-member Prescription Drug Affordability Board with three alternate board members appointed by the governor.  The legislation would also create an 11-member stakeholder council, including manufacturers, providers, suppliers, and patients.  The board would be charged with reviewing brand-name drugs, biologics, generic drugs, and biosimilars based on increases in the wholesale acquisition cost (WAC) within specific time periods or introductory prices.  The WAC is essentially a list price and does not represent what a patient will pay at the pharmacy after negotiations have occurred among pharmaceutical companies, insurers, pharmacy benefit managers, and pharmacies to lower out-of-pocket patient costs.  The board would have full authority to act if it is determined that a drug price is “too high,” after which an upper payment limit would be established. 

Establishing an upper payment limit is a price control that would further distort the medical marketplace and expand government control of the Virginia healthcare system.  If enacted, HB 1724 would fail to reduce prices and harm patients by stifling the development of new treatments and cures.  A January 21, 2025, nonpartisan fiscal analysis determined that this legislation will cost between $895,740 and $1,145,740 annually.

Instead of imposing damaging price controls, legislators should contact Virginia’s federal representatives and encourage them to hold the Food and Drug Administration’s feet to the fire for faster generic drug approvals and create an environment that encourages more “me too” drugs that will foster competition among branded pharmaceuticals that are in the same class and still under patent.  A permanent market-based solution will lower prices, not more government intrusion.  I urge you to oppose HB 1724 and refrain from enacting any form of drug price control legislation in Virginia.

Sincerely,
Tom Schatz
President, CCAGW