Washington - Oppose HB 1541 | Council For Citizens Against Government Waste

Washington - Oppose HB 1541

State Action

February 15, 2018

Senate Committee on Health and Long-Term Care
P.O. Box 40466
Olympia, Washington 98504-0466

Dear Senator,

The Washington House of Representatives passed HB 1541, a bill concerning prescription drug costs transparency, on February 7, 2018, by a vote of 50 to 48.  This bill would create arduous transparency requirements and compliance burdens on healthcare issuers and prescription drug manufacturers, such as a $1,000 per day fine for not complying with the law, and will do nothing to lower drug costs.  The bill would instead drive up drug costs and ultimately harm patients.  On behalf of the 49,370 supporters and members of the Council for Citizens Against Government Waste (CCAGW) in Washington, I ask that you and your colleagues oppose this bill.

Issuers would have to submit to a data organization, contracted by the Office of Financial Management (OFM), a compilation of the 25 most frequently prescribed drugs by in-network providers; the 25 costliest prescription drugs; the 25 drugs with the highest year-over-year increase in prescription drug spending; enrollee spending on prescription drugs; and, a summary analysis of the impact of prescription drug costs as compared to other healthcare costs.

The federal government already provides this information.  According to the Centers for Medicare and Medicaid Services, in 2016, 10 percent of the nation’s healthcare dollars went to prescription drugs.  The largest shares of the pie were 32 percent for hospital care and 20 percent for physicians and clinical services.

Manufacturers would have to provide information on the length of time a drug has been in the market; whether it is a brand name or generic; its pricing history for the previous five years; total financial assistance given through rebates and coupons; and, an economic justification for a price increase.

In addition, a manufacturer must give 60 days’ advance notice to the data organization if a drug’s list price to wholesalers or direct purchasers in the United States will exceed 10 percent or $10,000, whichever is less, over a 12-month period, and if the price will exceed 25 percent or $25,000, whichever is less, over a 36-month period.  This could create the potential for drug shortages through hoarding and some distributors stockpiling to take advantage of the situation, which will further drive up costs.

Generic drug companies operate on very small profit margins and represent approximately 88 percent of all prescriptions in the U.S.  Their products behave more like commodities as their prices fluctuate rapidly in a highly competitive marketplace.  It would be extremely arduous and costly, if not impossible, for them to produce the data required under HB 1541.

CCAGW believes the OFM’s December 2017 report to the legislature had it right when it stated in the summary, “ … transparency in prescription drug prices may face significant legal barriers, many of which are now being litigated in other states.  And while transparency may intuitively seem to be an effective mechanism in reducing unnecessary price increases because it has been implemented in only one state, there is little evidence to date to show that such provisions alone drive down or keep down prices.”

The price of prescription drugs generates much media attention and controversy, and it is understandable that 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 Washington legislators to ask their 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 unnecessary and counterproductive bill.

On behalf of Washington consumers and taxpayers, CCAGW urges you to oppose HB 1541.

Sincerely,

Click for PDF

 

Issues/Topics: 

Sign Up For Email Updates


Optional Member Code