What is transparency in diabetes drug pricing?
The word “transparency” gets tossed around a lot by people in the healthcare community (it was even one of DPAC’s top 5 buzzwords from a drug supply chain Congressional Health Subcommittee hearing in December). When patients call for more transparency, what do they actually want? The answer varies, of course, but for most people, transparency boils down into one main idea:
Patients should be able to clearly see the price of a drug or treatment
and determine how much they will pay out-of-pocket before receiving care.
Transparency in drug pricing has many positive consequences. When pricing information is available, consumers are better able to compare prices so they can make more informed decisions about their care. A Public Agenda survey found that most people in America want greater price transparency and would compare health care prices if given the option. And drug price transparency does not only educate patients, it actually lowers the cost of healthcare in the long run, according to Health Affairs.
How can federal and state governments help make drug pricing more transparent?
Federal efforts to increase transparency in diabetes drug pricing largely have not succeeded. Despite growing public and political outrage over pricing practices, legislation to require more federal oversight has not happened.
Rather than wait for federal assistance with drug pricing issues, states have been addressing the issues themselves. More than 176 bills on drug pricing and payment were introduced in 2017, in 36 different states, according to the National Conference of State Legislatures. States have had differing techniques for increasing transparency. Patient advocacy groups have been vocal with their suggestions to states. Public Agenda says state governments can combat price opacity by empowering providers and insurance personnel to talk about pricing and by guiding people toward reliable price information and explaining how prices vary across providers. The Catalyst for Payment Reform says states can fight price opacity through legislation and litigation. No matter how they get there, one thing is certain: state legislatures want solutions to the lack of transparency in drug pricing.
What states have transparency laws enacted and what states are currently considering them?
Most state drug price transparency bills are designed to identify the costs that contribute to drug manufacturer expenses and list prices and unveil the often opaque business practices of pharmacy benefit managers (PBMs). Some of the enacted state laws require manufacturers to justify prices, particularly for new drugs or for large increases in the price of older drugs.
Other states chose to use existing “unfair business practices” laws to impose new reporting requirements on manufacturers and PBMs. The states that currently have transparency laws are California, Colorado, Hawaii, Idaho, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nebraska, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.
Most of these same states also have legislation in process currently to strengthen their laws encouraging transparency. Many of the bills have similar provisions. Several would require public reporting of manufacturer information to justify price increases of a certain percentage over a year. Many target PBMs, requiring them to disclose conflicts of interest, financial benefit from dispensing prescription drugs, and contracts with manufacturers and labelers. Finally, many states are requiring manufacturers and PBMs to provide detailed reports on the pricing structure of prescription drugs that are popular in that state.
Some states are specifically targeting transparency in diabetes drug pricing.
Colorado HB 1009, Hawaii HB 2668, and South Carolina H 4490 would all require drug manufacturers to submit reports to the state board of health for diabetes products when the price increases more than the increase in the medical component of the consumer price index. The bills would require manufacturers to report market analysis, research, production, and marketing costs, among other information. There are proposed financial penalties for failing to comply. Finally, the bills would require PBMs to report on the total rebates received for diabetes products, the amount of those rebates retained by the PBM, and other information. Most advocate groups agree that these bills would be good steps in the effort to produce a more transparent diabetes drug pricing system.