CCAGW Urges North Dakota Governor Doug Burgum to Veto HB 1032 | Council For Citizens Against Government Waste

CCAGW Urges North Dakota Governor Doug Burgum to Veto HB 1032

State Action

April 23, 2021

The Honorable Doug Burgum
North Dakota Office of the Governor
600 East Boulevard
Bismarck, ND  58505-0100
 
Dear Governor Burgum,

The North Dakota Legislature recently passed HB 1032, related to pharmaceutical drug price transparency.  On behalf of the 4,469 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in North Dakota, I urge you to veto HB 1032.

HB 1032 will not work as intended.  Instead, it will create drug pricing confusion and provide data that will not be useful to citizens in North Dakota.  The legislation uses the wholesale acquisition cost (WAC) and a price increase of 10 percent or more within 12 months to trigger the reporting requirements, with a possible fine of as much as $10,000 if a health insurer, drug manufacturer, or pharmacy benefit manager violates the law.  But the WAC is essentially the list price and not what a patient pays at the pharmacy counter.  However, the data could be used by to competitors to figure out what their rivals charge, as was discussed in a July 2, 2015 Federal Trade Commission policy paper that CCAGW referenced in a March 8 letter to legislators and March 16 testimony before the Senate Human Services Committee opposing this legislation.

In listening to oral testimony given to the Senate Human Services Committee on March 16, in states that passed similar legislation a few years ago, like Maine and Vermont, there have been no significant savings or decreases in drug pricing even though there have been increases in costs to the run the programs, which means the legislation was nothing more than a waste taxpayer resources.

The private negotiations on drug pricing, which occur among prescription drug companies, wholesalers, and pharmacy benefit managers that design drug benefit plans for their clients, like self-insured employers, unions, commercial health plans, state government plans, and Medicare Part D plans, can be complex but are also robust and competitive.  Each stakeholder depends on the other for the market to work.  One way to think of this is when a consumer goes into a large retail store to purchase a new television, they want to know what they will pay at the counter.  They do not know what the retailer negotiated with wholesaler, or what the manufacturer negotiated to obtain the electronic circuit boards that are needed to operate the television.  This kind of information is not relevant to the final price they pay.

CCAGW believes that HB 1032 is a fishing expedition that eventually could lead to price controls, which are extremely destructive to innovation, cause shortages, and never solve the problem they were intended to fix.  Drug prices in other countries are generally lower than in the U.S. because their government-run, socialistic healthcare systems regulate prices and ration care.  In the mid-1980s, Europe led the U.S. in pharmaceutical research and development by 24 percent, but by 2015 they were behind by 40 percent due to implementing price controls.

There are better ways to lower drug prices and they include urging North Dakota’s congressional delegation to continue to make sure the Food and Drug Administration gets new drugs approved, both brand name and generic, in a timely way.  You and the legislature should also encourage your federal representatives to create better trade deals so that economically advanced countries pay their fair share of biopharmaceutical research instead of continuing to free-ride on American citizens and taxpayers.  These actions would be a far more effective way to help bring down the price of prescription drugs than signing this legislation. 

Again, I urge you to veto HB 1032.

Sincerely,

Tom Schatz
President, CCAGW

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