How Vermont aims to cut drug spending

If a proposed Vermont bill is successful, drug companies would have to explain why they hiked prices on certain drugs.

The state Senate passed S.216 – and the House preliminarily approved the bill – which would require the state health board to submit a list of 15 prescription drugs with dramatic price increases to the state attorney general’s office. The drug manufacturers involved would need “to provide justification for the increase in the price of the drug”, according to the bill.

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However, there are no penalties for drug manufacturers who choose not to comply.

The bill also requires health insurers to make information about their prescription drug formularies available to enrollees, potential enrollees and health care providers via interactive web sites. In addition, hospitals would have to provide prescription drug cost-sharing information to hospital-affiliated physicians through the hospital’s electronic prescribing system.

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However, Pharmaceutical Research and Manufacturers of America (PhRMA) said that the legislation will increase drug prices. Forcing drug manufacturers to disclose prices would “chill the incentive” for drugmakers to give discounts to certain populations who need discounts, PhRMA wrote in its testimony to the legislature.

“In fact, the Federal Trade Commission has indicated that disclosure of proprietary information would not lead to lower prices, but would likely lead to increased prices,” PhRMA wrote.

In addition, the pricing information might not be relevant because, in many cases, manufacturers “are not privy to the final price paid in Vermont,” PhRMA wrote.

Read more: Americans want drug pricing reform

Next, the bill will go before Gov. Peter Shumlin.