Working People are Tackling High Drug Costs Through State-Level Reforms

Working People are Tackling High Drug Costs Through State-Level Reforms

Despite all of the talk in Washington, D.C., about health care, Congress and Donald Trump have done nothing to deal with the No. 1 health care problem facing working people. Surging health care prices—especially prescription drug prices—are putting ever-increasing pressure on family budgets, workers’ health plans and public health programs.

Consider this: the average annual cost of a brand-name drug grew to $5,807 in 2015, more than three times what it was in 2006 ($1,788), according to AARP’s most recent analysis of widely used brand-name prescription drugs. There also have been instances of immense overnight increases in the price of some generic drugs. For example, drug manufacturer Rodelis raised the price of Seromycin, its off-patent tuberculosis drug, from $500 to $10,800 for a 30-day supply.

While federal policy makers ignore the problem with drug prices, working people are calling on their elected state representatives to take action. In two states—Nevada and California—working people have won important breakthroughs this year, establishing new rules requiring prescription drug corporations to be more transparent about their prices and the reasons for them, especially when drug prices go up by large amounts.

In Nevada, a coalition of unions spearheaded by the Culinary Workers Union and including the Nevada State AFL-CIO led the fight to win enactment of diabetes medication price transparency rules. Under this first-in-the-nation law, corporations that manufacture essential diabetes drugs must explain any price increases that are larger than the price increases for medical care overall. Between 20022013, the price of insulin jumped by nearly 200%. With 12.4% of adult Nevadans having diabetes, and 38.5% with pre-diabetes, such a large price increase hurt working people and their health plans and raised serious concerns about whether these increases were justified. The new law also requires prescription drug manufacturers to provide the state with a list of all of their sales representatives operating in Nevada, and those sales representatives must submit annual reports disclosing their activities. Further, a nonprofit group in Nevada that advocates for patients or funds medical research has to disclose any payments, donations or anything else of value it receives from a prescription drug manufacturer or certain other drug-related corporations or lobbying groups. The legislation was sponsored by Sen. Yvanna D. Cancela, who represents Nevada’s District 10 and is a member of Culinary Workers Union Local 226.

In California, a two-year fight led by the California Labor Federation resulted in enactment of a law that requires prescription drug manufacturers to provide health plans, public purchasers such as the state’s large public employee health plan (CalPERS) and pharmacy benefit managers 60-day advance notice of price increases greater than 16% over a two-year period. The manufacturers also are required to explain to state regulators the factors behind the price increase. Pharmacy benefit managers are required to notify workers’ health plans of these large price increases so steps can be taken to deal with these increases, including negotiating better deals when possible. Drug manufacturers also are required to notify the state when they start selling new expensive drugs (costing $670 or more per month). The legislation was authored by Sen. Ed Hernandez, who represents California’s 22nd Senate District and is a doctor of optometry.

The United States is the only major economy without any government oversight or regulation of prescription drug prices. Federal law gives drug corporations unchecked monopoly rights for brand-name drugs over long periods, and there is little, if any, competition in the sale of some generic drugs. Companies are not even required to explain or justify their pricing decisions. While patients and their private health plans are “free” to negotiate with drug companies, in reality they face a take-it-or-leave-it proposition: pay the company’s price or go without a needed drug.

With the new Nevada and California state drug price transparency laws, working people are sending a powerful signal that they want and need real action on health care prices. Requiring prescription drug corporations to justify big price increases is an important reform that could cause drug manufacturers to reconsider excessive price hikes, give workers’ health plans better tools to negotiate fairer prices, and lead to improved prescription drug policies from federal and state lawmakers. Hopefully, Congress and President Trump are paying attention and will start making even bigger changes to bring down prices, like authorizing Medicare to negotiate prescription drug prices for seniors and people with disabilities, and stopping corporate abuses of federal patent laws.

Kenneth Quinnell
Thu, 11/16/2017 – 09:07

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Updated: November 28, 2017 — 4:44 am