VT to become 1st state to require drug makers to explain price increases

[cali]

Vermont is poised to become the first state requiring drug companies to explain their price increases, and Bob and Deborah Messing think that’s a good idea.

The Messings live in Montpelier and are in their early 70s. She’s on Orencia, a Bristol-Myers Squibb product, for rheumatoid arthritis. He recently finished a course of Harvoni, made by Gilead Sciences Inc., to treat hepatitis C.

Both drugs are expensive, though for people of the Messings’ modest income, big manufacturers’ discounts and state assistance make their costs manageable. Harvoni lists at $1,125 per pill, or $94,500 for a 12-week course of treatment. Orencia’s list price tops $3,000 a month.

<snip>
Vermont state Rep. Christopher Pearson, a member of the Vermont Progressive Party from the state’s largest city, Burlington, and a key supporter of the legislation, noted prescription drugs often sell for far less in other countries and offered another reason for high prices: the inability of Medicare and Medicaid to negotiate better prices under federal law.

Priscilla VanderVeer, spokeswoman for the Pharmaceutical Research and Manufacturers of America, said Vermont is the first state to see a transparency bill pass both houses of its Legislature.

If the governor signs the bill, which is likely, it wouldn’t be the first time one of the nation’s smallest states in both size and population has taken on big business. Vermont in 2007 passed a law to restrict prescription “data mining” by companies that track doctors’ prescribing habits and sell the information to drug companies, but the U.S. Supreme Court shot it down in 2011. The food industry so far has failed to block a Vermont law to require labeling of genetically modified food that is set to take effect July 1.

<snip>
https://www.washingtonpost.com/national/health-science/vermont-to-require-drug-makers-to-explain-price-increases/2016/05/14/6d698f08-19d1-11e6-971a-dadf9ab18869_story.html

[redstateblues]

1. Meaningless. In my state the utilities have to explain rate hikes

It doesn't stop rate hikes

[cali]

2. Not remotely meaningless, as this detailed article explains

[Jim Lane]

3. I read the article and I don't understand the meaningfulness

Two critical points weren't addressed: what counts as an explanation, and what's the consequence of failing to provide an explanation?

An honest explanation would often be, "We did a market analysis with particular attention to the elasticity of demand. We knew that raising the price would mean a lower volume of sales but more profit per unit. We set the price where we thought it would maximize our total profit." So what do the regulators do if that's the explanation they get?

As to the second point, Vermont's problem is that it's not a major market. That means it has limited ability to pressure the big pharma companies. If the condition of selling a drug in Vermont is to make a full disclosure of internal processes, possibly including trade secrets about the research and testing process, and also inviting a storm of criticism over the price increase, a manufacturer would often find it advantageous to just walk away from Vermont. People from Vermont who want the drug will just have to travel out of state (or to Canada, which I assume some of them do now anyway). Some of those people would be mad at the manufacturer, which wouldn’t care, and some would be made at the state’s elected officials, who would care. This looks like a showdown Vermont would lose.

[JustABozoOnThisBus]

4. I gotcher explanation, right here ...