Washington - Oppose SB 5292 | Council For Citizens Against Government Waste

Washington - Oppose SB 5292

State Action

 

 

February 19, 2019

Ways and Means Committee
Washington State Senate
State Capitol Building
Olympia, WA 989504

Dear Senator,

On behalf of the 49,644 members of the Council for Citizens Against Government Waste (CCAGW) in Washington, I urge you to oppose Senate Bill 5292.  This legislation would impose on pharmaceutical manufacturers wasteful and unnecessary mandates that would do nothing to lower the cost of drugs and hurt the patients who need them most.

SB 5292 would require pharmaceutical manufacturers to disclose proprietary information about the price of drugs, including 60 days’ advance notice of a price increase.  Requiring this disclosure will not lower the drug’s cost and could lead to hoarding and shortages.  Since many generic drugs are very inexpensive, a price increase of pennies per dosage would be covered by this legislation.

A July 2, 2015 Federal Trade Commission report, “Price Transparency or TMI,” concluded that forced disclosure of sensitive and proprietary information can undermine natural market forces and hinder the competition that results in innovation and lower costs.  This is a particularly important consideration because the cost of prescription drugs is the only significant component of the healthcare system that diminishes over time.  If any of the information required in SB 5292 is leaked or even reported in the aggregate, it would be beneficial to competitors and stifle price reduction negotiations.

SB 5292 would require prices to be reported based on the wholesale acquisition cost (WAC), which is not an accurate measure of the true cost of a medicine.  Pharmaceutical companies, pharmacy benefit managers, insurers, and pharmacists engage in robust negotiations that lead to lower drug costs for their customers.  Instituting transparency requirements such as those advocated in SB 5292 would interfere with these negotiations, cost the stakeholders large sums of money to gather and report the information in a timely basis to avoid the fines, and would drive up costs, not lower them.

Lastly, the Supreme Court looks unfavorably on requirements that compel speech.  This legislation would likely result in unnecessary court challenges that will waste taxpayer dollars.

Enacting SB 5292 would represent serious governmental overreach, pointlessly single out pharmaceutical manufacturers, fail to lower the cost of medicines, and hurt patients.  I urge you to oppose this legislation.

Sincerely,

Thomas A. Schatz

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