Rising drug prices spur Massachusetts debate over disclosure proposal impacts

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BOSTON — Pharmaceutical and biotechnology officials asserted Monday that proposed drug pricing disclosure mandates would drive up development costs and hurt a key Massachusetts industry, drawing skepticism from lawmakers who challenged them to provide proof of their claims.

At a hearing before the Joint Committee on Health Care Financing, the groups blasted legislation that would charge manufacturers of certain prescription drugs with maintaining and reporting information on the costs of developing and marketing those medications. Supporters of the bill (S 1048) described it as a way to obtain key data to inform policy discussions and as part of a series of steps needed to rein in rising health care costs.

Jonathan Fleming, president and CEO of the Cambridge-based Q-State Biosciences, called the bill a "nightmare" for businesses like his 25-person company, with the potential to create uncertainty that could scare off investors.

"Please, do not support a bill that would put all of this investment in our future at risk," Fleming told the committee. "There are indeed more effective ways of keeping the growth of health care costs, indeed drug costs, to levels the state can support. Another aspect of this bill that makes me shudder is the cost and difficulty of compliance with the additional record-keeping and regulatory bookwork."

Rep. Lori Ehrlich, a certified public accountant and a co-sponsor of the bill filed by fellow committee member Sen. Mark Montigny, countered that manufacturers already track their costs, and that much of the work is computerized.

"I don't see the reality of the threat you're making before us," Ehrlich, a Marblehead Democrat, said.

The industry group Pharmaceutical Research and Manufacturers of America issued a statement calling the bill's requirements "burdensome, duplicative and costly," with the potential to "impede access to life-saving treatments for millions of people in the Commonwealth."

The bill "would not help patients or the Commonwealth in any way," Leslie Wood, PhRMA's deputy vice president for state advocacy, told the committee. "Instead it would stifle innovation and conversely lead to higher prices for patients and the commonwealth."

More than once during the hearing, Montigny told opponents of his bill to "give me a break."

"I've been listening to the same talking points from PhRMA for a long time," the New Bedford Democrat said. "The suggestion that I as a chief sponsor would do something to destroy access is silly."

Montigny also repeatedly disputed descriptions of the bill as price control or price cap legislation.

"We are only saying, from a point of strength, we have a right to figure out what we're paying for the product," he said. "When you buy a hundred cars for the fleet for the state police, you don't go to a hundred dealers and say, 'Give me your worst deal, I'll take them one at a time.'"

The bill charges the state's Health Policy Commission with creating a list of "critical" prescription drugs whose manufacturers would be required to report cost information. If the commission deems a drug's price "significantly high," it would be able to "set the maximum allowable price that the manufacturer can charge" for that drug when it is sold in Massachusetts.

"Compelling any private-sector company to disclose highly sensitive proprietary information is something policymakers should approach with great trepidation," Massachusetts High Technology Council executive vice president Mark Gallagher said in written testimony. "Similarly, creating a mechanism by which a government agency can cap the price of a private entity's products is troubling on its face and seemingly at odds with the fundamental tenets of our economic system."

Speaking in support of Montigny's bill, internist Dr. Elisa Choi said that not knowing why drug prices increase or why certain drugs cost more than others limits her ability to answer patients' questions and advocate for them.

Choi said the American College of Physicians sees transparency measures as "exceedingly important stepping stones in our effort to repair some of the broken aspects in our prescription drug market."

Also among the bill's backers is the Massachusetts Association of Health Plans, which described it as "an important step to hold the entire industry accountable."

"The transparency provisions included in the bill are essential to give policymakers the necessary tools to examine the role increases in pharmaceutical pricing plays in meeting the statewide cost benchmark," the association's testimony said.

Opponents said that insurance companies set the prices patients pay at the pharmacy counter, not drug manufacturers.

"The bill prefers that we forget the fact that a large portion of pharmaceutical research and development costs do not lead to a commercial drug," said Massachusetts Biotechnology Council president Robert Coughlin. "In this way, the R&D data required to be submitted under the legislation significantly understates true R&D costs and artificially inflates what payers want you to believe are excessive profits on the sale of drugs."

When the insurance industry's support for the bill was brought up, Montigny said he "didn't file this bill on behalf of anyone other than patients."

"The insurance industry...is nothing more than the enemy of my enemy is my friend," Montigny said. "I don't work with them closely, I don't file legislation on their behalf. Frankly, I don't care at the end of the quarter whether they suffer or not. It is access and pricing and in this case, what possibly can happen from profit transparency?"

Gov. Charlie Baker is "toying" with the idea of turning to the state's all-Democrat Congressional delegation for help impressing upon the Obama administration the need to speed up the Food and Drug Administration's generic drug approval process to begin to drive down costs, he said Monday.

Baker met with the Democratic legislative leaders as the hearing was underway on Montigny's proposal. After their meeting, Baker said 90 percent of all prescriptions and 70 percent of all drug spending is for generics, which he said have seen the "biggest run-up in prices" in recent years. According to Baker, it takes the FDA 48 months to approve a new generic drug for use, with over 4,000 generics in the pipeline.

"I've been toying with the idea to see if we can't get our Congressional delegation to put some heat on the Obama administration to deal with the fact that the calcification of the approval process at the FDA is creating real heartburn, not just for consumers but for folks who would like to put drugs into the market to serve that generic market and create the kind of competition on price that's sort of fundamental to our ability to control prices," Baker told reporters.


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