An effort to bring more transparency to how the pharmaceutical industry operates and eventually drive down costs for consumers passed its first committee hearing Tuesday.
The House Health Market Reform Subcommittee approved a proposed committee bill that would require pharmaceutical manufacturers to notify pharmacy benefit managers of any price inquiries at least 60 days before prices go up and to provide an annual update to the Office of Insurance Regulation (OIR) outlining which drugs increased in price and why.
The bill would also require pharmacy benefit managers to provide updates to the OIR outlining their revenue sources. It would also provide protections for pharmacies by enforcing laws already in place about how and when pharmacy benefit managers can audit them.
While the bill passed, it did so with intense pushback from pharmacists, small pharmacy owners and representatives, health care professionals and some lawmakers on both sides of the aisle who sit on the committee.
Pharmacy benefit managers are pharmacy middlemen established to facilitate claims approval for medications that require authorization in real-time. But many believe the industry has become outsized and is operating in a way that protects profits for the industry at the cost of both consumers and small pharmacies by failing to pass through things like rebates from drug manufacturers.
Critics of the proposed bill mostly agreed it was a good first step, but argued it didn’t go far enough to solve problems plaguing the industry or create meaningful savings for consumers, particularly those who are uninsured.
Rep. Alex Andrade is spearheading the effort. He said there was still more work to be done to make the bill better, but pushed back on some of the criticism.
Rep. Margaret Good argued the transparency model calling for annual price change reports to the OIR should be done in real-time, not annually, and that real-time notifications about price increases provided to the industry should also be provided to consumers.
“If we were to give them 60 days notice they may then have the opportunity to go back to their doctor and talk about a generic or a different course of treatment … so they can make decisions about their health that they can afford,” Good said.
But Andrade expressed concern that such a move would infringe on private contracts between pharmacies, pharmacy benefit managers or pharmaceutical manufacturers and that it would create an onerous mandate.
“The amount of paperwork that would probably require … would probably be difficult to implement in the first year. The purpose of this bill is to start getting information so we can make good policy decisions in the future,” he said.
Good pushed back further, arguing the data collected might not be sufficient to inform future policy. She also argued the issue should be addressed now, not later.
“There’s a lot of work that can be done here and I don’t think that we can really wait,” Good said.
Despite her concerns, Good voted to move the bill forward.
Andrade’s proposal serves as an alternative to Rep. Jackie Toledo‘s proposal (HB 961), which includes more than just transparency, data collection and price notification. Her bill would create a regulatory framework ensuring pharmacy benefit managers pass on some savings through rebates to consumers and pharmacies.
If pharmacy benefit managers don’t abide by transparency components of her bill, they would be subject to up to $10,000 in civil penalties.
Despite Toledo pushing her own bill, she voted in favor of Andrade’s bill to keep the conversation moving.
A trove of pharmacy students attended the meeting to speak against Andrade’s bill and ask that the committee instead consider Toledo’s, which they said would better address the problems within the system.
Toledo’s bill has not been taken up by the committee, which is its first stop.
Andrade’s bill, meanwhile, will move to its next committee, though that stop has not yet been determined because it was a proposed committee bill and not a regularly filed bill.