Oppose HB 436 - Pharmaceutical - Louisiana | Council For Citizens Against Government Waste

Oppose HB 436 - Pharmaceutical - Louisiana

State Action

Louisiana House of Representatives

900 North Third Street

Baton Rouge, Louisiana 70804


Dear Representative,

You are scheduled to consider HB 436 on Wednesday, May 24, 2017.  This bill would require drug manufacturers to provide information regarding prescription drug prices.  Should the bill’s sponsor, Rep. Kirk Talbot, again offer to the full House amendments similar to those proposed to the Committee on House & Governmental Affairs, which strikes much of the bill, then section Subpart C, which creates a new regulatory burden on business, will remain intact.  On behalf of the 18,351 members and supporters of the Council for Citizens Against Government Waste in Louisiana, I ask that you oppose this legislation, whether the bill is amended or not.

The proposed amendment would require any person engaged in any form of prescription drug marketing directly, or by phone, to provide a healthcare provider with the following information:  The date the educational or marketing materials were prepared; the name of the drug and current manufacturer; the average wholesale price (AWP) of a thirty-day supply of the drug described in the educational and marketing materials; the AWP of the drug for less than a thirty-day supply; the AWP for each label indication, reflecting any differences as a result of different strengths and dosage forms; the date the drug was first marketed in the U.S. and the AWP on that date; and the AWP on each date that the price has changed since the drug was first marketed.

These burdensome requirements will do nothing to lower drug prices, since they will be an additional expense for the manufacturer, and the information that would be provided to the physician is useless since it does not represent the price patients will pay.  First, the AWP is a benchmark and is based on data obtained from a variety of sources.  Second, at the pharmacy, the price is negotiated among wholesalers, pharmacy benefit manufacturers (PBMs), insurers, and pharmacists.  Basing a prescription on the AWP inadvertently directs a physician to make a decision on price and not what is best for the patient’s condition.

The bill’s sponsor perpetuated a myth before the Committee on House and Governmental Affairs when he stated that prices in Medicare Part D, the prescription drug program for seniors, are not negotiated and represents “the wild west” when it comes to drug fees.  You may be aware that unlike the VA or Medicaid, which utilize statutorily mandated prices and discounts (price controls) to lower drug costs, private sector negotiations among PBMs, insurers, manufacturers, wholesalers, and pharmacies are used in Medicare Part D.  These negotiations have helped make the program one of the few that has cost less than predicted.  In 2005, the Congressional Budget Office estimated Medicare Part D would cost taxpayers $172 billion by 2015; its actual 2015 cost was $75 billion.  

It is understandable that legislators, government officials, and consumers are concerned about high drug prices, but an environment that fosters competition is the better approach to lowering prices.  It takes 10 to 12 years to get a new drug through the Food and Drug Administration (FDA) approval process and costs about $2.6 billion to do so.  The 21st Century Cures Act (P.L. 114-255), which was signed into law on December 13, 2016, provides new methodology, such as biomarkers and real-world evidence, to speed up clinical trials and the approval process.

In addition, Congress is currently considering reauthorization of the Generic Drug User Fee Amendments (GDUFA II).  One of the law’s primary goals is to speed up the availability of generic drugs to consumers.  Currently, with a backlog of more than 4,000 generic drug applications, the FDA has a lot of work to do.

Therefore, rather than approving HB 436, members of the Louisiana Legislature should instead prod their U.S. representatives and senators to hold the FDA’s feet to the fire to make sure the agency quickly adopts the new methods contained in the 21st Century Cures Act, and ensure that GDUFA II will force the FDA to focus like a laser beam on reducing the generic drug backlog.  That would be the most effective solution to lower the price of pharmaceuticals.

On behalf of Louisiana consumers and taxpayers, I urge you to oppose HB 436.


Tom Schatz

President, CCAGW


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