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Election Cycle Draws Attention to Rising Drug Costs

Vermont will soon become the first state in the nation to require drug companies to explain to consumers some price increases associated with certain medications.

With General Assembly passage on May 6, both houses of the state legislature have approved the drug pricing transparency legislation and Gov. Peter Shumlin is expected to sign it into law. It would require state health-care officials to create a list of 15 drugs with prices that have had the biggest increases. The manufacturers of those medications would then be required to explain to the state attorney general's office why such price hikes are justified.

"Why can't the state say to the pharmaceutical companies selling the drug, 'Hey, if you're going to hammer us with a 50-percent price increase, we want to know why,' " Vermont Sen. Peter Welch, who leads a House Drug Pricing Task Force, told The Associated Press of his state's drug bill.

The drug industry group PhRMA argued, though, that such a law would serve to increase prices. John Murphy, assistant general counsel for the Pharmaceutical Research and Manufacturers of America, tangled with Vermont lawmakers at a hearing in March. He described drug pricing in the U.S. as "complex."

“What is the goal of legislation like the one being discussed here in Vermont?” Murphy asked at the hearing. “Is the goal to simply require manufacturers of pharmaceuticals to undertake another compliance obligation? Some of the things which are called for in this bill are effectively unreportable or would have to be fictitiously decided or attributed from a financial statement.”

He added, when asked to describe his industry's specific concerns: “One would be not having competing compliance costs in multiple states because all that does is add costs to the system. I just don’t think that disclosing a set of numbers is going to get anything productive out of it.”

A growing coalition of insurers, retailers, health-care providers and consumers are hoping the 2016 election cycle will rally support for more transparency in the cost of prescription drugs.

The National Coalition for Sustainable Rx Pricing, which includes about 80 participants — from Walmart to the AARP — wants Congress to review current drug policy with an eye toward changing drug laws to allow more competition and affordability.

That includes speeding up approval on generic drug applications, now significantly backlogged at the Food and Drug Administration, and cutting back on what is now a 12-year exclusivity period on biological drugs. Typically, when drugs come off patent, prices do not change because they lack a generic competitor.

California will have a ballot initiative before voters in November designed to give consumers greater transparency on drug costs, and Ohio may have one as well, depending on some legal wrangling. The two state proposals put the brakes on what drug companies can charge public payers and also make certain that states don't have to pay any more for prescription drugs than the Department of Veterans Affairs, which is able to negotiate the prices it pays for its medications.

PhRMA filed a lawsuit in March to stop the Ohio ballot measure, saying it was concerned over how petition signatures were gathered and vetted. Activists who had worked on the ballot measure were angered by the legal quibbling, with Michael Weinstein, president of AIDS Healthcare Foundation, calling the lawsuit "an act of desperation" in a statement.

The California Drug Price Relief Act has gotten national attention ahead of a November vote with opponents already spending more than $68 million to defeat it, a figure that is expected to climb to more than $100 million by Election Day.

In 2015, prescription drug spending was up 8.5 percent to hit $310 billion, according to a report from IMS Health, a data firm that tracks prescription costs. It found that spending on drugs is predicted to hit $370 billion to $400 billion by 2020.

Members of Congress, insurers, physicians and consumers, along with Democratic presidential candidate Hillary Clinton and presumed GOP nominee Donald Trump, have raised the issue of reining in drug costs, noting their burden on the most vulnerable including seniors.

In March, drug manufacturing company leaders and lobbyists met in Boston with a group of investment fund executives to talk in private about effectively defending their interests as pressure to cap drug prices mounts in Washington and as investors register concern.

U.S. citizens pay more for medications than citizens in many other developed countries, which set national drug-price caps through national health-care policy. The drug prices are documented by the International Federation of Health Plans.

For example, in 2013, U.S consumers paid $1,913 annually for the rheumatoid arthritis drug Humira. In Switzerland, the average annual price was $881 while in Great Britain, the price was $1,102. The drug Copaxone, used to treat multiple sclerosis, cost U.S. consumers on average $3,875 a year, while patients in Great Britain paid $862 annually.

These figures do not take into account the amount of tax money spent subsidizing pharmaceutical prices in other nations.

In the wake of the Affordable Care Act, insurance providers have also moved to staunch drug prices, seeking discounts on well-known medications even as some drug companies raise costs on such prescriptions each year.

Drug development is big business. More than 40 new medications and reformulation of 30 existing prescription drugs were introduced into the marketplace in 2015, with the number of prescriptions filled hitting 4.4 billion, the reported noted. That figure marked a 10-percent hike.

Greg Wellman, a professor of pharmacy administration at Ferris State University in Michigan, says the U.S. is far away from drug pricing caps used in other countries, noting that regulatory caps on market items don't have much history of success in this country.

But he agrees that more talk about stopping rising drug costs has emerged in recent months.

"These escalating prices have really broken through in the public consciousness, and that is translating to Congress," Weldon said. "Whether they would get concerned enough to establish price fixing, that seems to be a pretty difficult thing for them to want to try to do.”

"We see hearings and a lot of public discourse, and we'll hear a lot in the present election, but whether or not there will be a Congressional impetus to doing something, I'm not sure," Wellman said. "I don't see any legislation on the horizon in the U.S. that is going to have the impact or magnitude of what is going on in other developed countries around the world to do that."