Nebraska - Oppose LB 862 | Council For Citizens Against Government Waste

Nebraska - Oppose LB 862

State Action

February 21, 2018

Legislature of Nebraska
Health and Human Services Committee
State Capitol
Lincoln, NE  68508

Dear Senator,

You will soon consider LB 862, which would impose extraordinarily burdensome requirements on prescription drug manufacturers and stifle innovation, while doing nothing to lower prices.  On behalf of the 12,970 members of the Council for Citizens Against Government Waste (CCAGW) in Nebraska, I urge you to oppose this destructive legislation.

The Federal Trade Commission has acknowledged that disclosure of pricing information could undermine beneficial market forces within the industry, leading to higher prices—not lower ones.  Moreover, requiring manufacturers to provide 60 days’ notice of price increases would set off alarm bells among wholesalers and suppliers, and could lead to hoarding and shortages.  

The proposed required notice of price increases in LB 862 refers to the wholesale acquisition cost (WAC).  The WAC is essentially a list price and does not account for rebates, discounts, and other price concessions given for pharmaceutical distribution.  Thus, the reams of data that will be collected would not accurately reflect the cost paid by consumers, would be of little value, and will not lower drug costs.  If anything, it will raise drug costs because of the extra accountants and lawyers that will be needed to produce the data in a timely manner.

The bill also demands a comparison between the U.S. price and international prices.  But this is comparing apples to oranges, because most foreign countries use price controls to determine drug costs, not the free market, while free-riding on U.S. taxpayers and patients for pharmaceutical innovation.   While the U.S. is miles ahead of everyone else in drug development and innovation, fairer trade deals could lead to other countries paying their fair share of biopharmaceutical research. 

The price of prescription drugs generates much media attention and controversy, and it is understandable that legislators, government officials, and consumers are expressing their concern.  But, the best approach to lowering drug prices is an environment that fosters competition and innovation.  It takes 10 to 12 years to get a new drug through the Food and Drug Administration (FDA) approval process, which costs an average of $2.6 billion.  Fortunately, Congress has taken steps to speed up clinical trials and the approval process, though more remains to be done.

One way to lower prices would be for Nebraska legislators to ask their U.S. congressional delegation to continue to hold the FDA’s feet to the fire to make sure the backlog of generic drugs awaiting approval can be cleared.  This would be a far more effective way to help bring down the price of prescription drugs than passing this harmful and counterproductive bill. 

Again, I urge you to oppose LB 862.


Thomas Schatz

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