Testimony on H.B. 326 for Montana State Legislature - Montana | Council For Citizens Against Government Waste

Testimony on H.B. 326 for Montana State Legislature - Montana

State Action

House Business and Labor Committee
Montana State Legislature
Helena, Montana

Testimony for the Record
on
H.B. 326, An Act Requiring the Reporting of Pricing Factors for Certain Prescription Drugs; Requiring a Report to the Governor and Legislature, and Providing Penalties

Council for Citizens Against Government Waste
Washington, D.C.

February 3, 2017

The Council for Citizens Against Government Waste (CCAGW) appreciates the opportunity to present testimony for the record on H.B. 326, “An Act Requiring the Reporting of Pricing Factors for Certain Prescription Drugs; Requiring a Report to the Governor and Legislature, and Providing Penalties.”  While the supposed purpose of the bill is to provide transparency in prescription drug pricing that will ultimately lead to lower costs and more access, if H.B. 326 is enacted into law, costs will increase and access will be restricted for patients, employers, and taxpayers.  On behalf of the more than 9,400 CCAGW members and supporters in Montana, we ask that you reject this ill-advised legislation.

The bill would require a pharmaceutical manufacturer that sells a prescription drug in the state of Montana and whose wholesale acquisition cost (WAC) increases by more than twice the increase in the consumer price index for medical care commodities in the previous year, to provide all relevant information and supporting documentation necessary to justify the price increase to the state attorney general.

The bill would also require any pharmacy benefit manager (PBM) that operates in Montana and processes the aforementioned prescription drugs, to provide any information to the state attorney general concerning the amount of discounts or price concessions it receives from a manufacturer or negotiates with an insurer, and whether it passes along any rebate, discount, or price concession to a pharmacy or consumer.

In turn, the state attorney general will provide a report to the state legislature before December 1 of each even-numbered year based on the information provided and post it on the Montana Department of Justice website.  The state attorney general is also required to provide a preliminary summary of all information received to the Children, Families, Health, and Human Services Committee by June 30 of said even-numbered year.

These reporting requirements are burdensome, useless fishing expeditions that will produce reams of data but will do nothing to lower costs.  Instead, by meddling in the sensitive negotiations that occur among PBMs, manufacturers, insurers, and pharmacies, prices will likely go up.  Furthermore, manufacturers and PBMs will spend more money to hire accountants and lawyers, while spending less on valuable research, developing a generic version of a branded drug, or serving their customers and patients.

The bill’s focus on wholesale prices does not take into consideration the intense negotiations that occur among the PBMs, pharmaceutical companies, and pharmacies, which have been proven to lower drug costs.  It also ignores the value and benefit that pharmaceuticals bring to healthcare by keeping people out of the hospital and doctors’ offices, saving healthcare dollars and enabling them to stay healthy and lead productive lives.

And while the bill states that information provided by manufacturers and pharmacy benefit managers will remain confidential, the federal government and state governments have proven time and again they are incapable of doing so.

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 instead of inserting the government into controlling drug pricing.  Since 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, 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, there is a backlog of more than 4,000 generic drug applications that is slowing the process of bringing more competition into the marketplace.  Members of the Montana Legislature should prod their U.S. representative and senators to hold the FDA’s feet to the fire to make sure the agency quickly adopts the new methods found in the 21st Century Cures Act and focuses like a laser on reducing the generic drug backlog.  That would be the most effective solution to any perceived, or imagined, problems with the price of pharmaceuticals.

Thank you for considering our objections to H.B. 326.

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