HARTFORD, CT — A bill imposing stricter reporting requirements on pharmaceutical companies and pharmacy benefit managers easily passed the House Friday by a vote of 149-0. It now moves to the Senate.
Rep. Sean Scanlon, D-Guilford, called the legislation “groundbreaking.”
“We will be the first state in the nation,” Scanlon said, to have such legislation. He said the transparency the law brings should “lead to lower drug costs for people of Connecticut” even though there’s nothing in the legislation that would explicitly do that.
Scanlon said the law would require drug companies to justify any price increase exceeding 20 percent that a prescribed drug goes up in any year; additionally a drug company would have to justify any price increase of more than 50 percent over a three-year period.
The bill mandates that consumers get immediate relief at the pharmacy counter — paying post-rebate costs instead of a drug’s list price.
Additionally, the bill would mandate reporting from manufacturers on “pipeline” drugs awaiting Federal Drug Administration approval to allow the state and other payers to better prepare for new market entrants.
The bill would also mandate Pharmacy Benefit Managers (PBMs) registered to operate in Connecticut to disclose the total amount of rebates received from manufacturers, including how much of the rebate the PBM retained versus how much was passed down to plan sponsors and consumers.
The bill also requires PBMs to report their administrative fees, including any other payments by the manufacturer to the PBM that are not considered rebates.
“This is a tremendous bill that finally allows people to get the answers that they deserve,” Scanlon said. “To try and get some more information and some understanding on what is driving these costs.”
“At its heart,” Scanlon continued, “it’s a piece of transparency legislation,” which he said will hopefully, down the road, slow the trend of increasing drug prices.
Scanlon gave a lot of credit to state Comptroller Kevin Lembo for working with him, and other advocates, on formulating the bill’s language.
Lembo said passage made it “clearly a great day for patients and and their families” in Connecticut.
He added the bill is so important “for those who struggle to get information to understand why prices are increasing as much as they are. Lembo added the bill will give the state new information on what drugs are increasing at higher than average percentage rates “and forces Pharma to rationalize that and why that’s happening.”
During debate on the bill, Rep. Rob Sampson, R-Wolcott, ranking member of the Insurance and Real Estate Committee, said one point that shouldn’t be forgotten is that government is part of reason for increasing drug costs.
“We need to remember that we are the primary cost driver,” Sampson said, stating when new legislation is passed mandating new coverages it comes at cost.
“We are making health care cost more,” Sampson said. “We are making insurance cost more.”
Sampson said he wanted to make it clear while he supported the intent, and voted for the bill, that, “We also want to make sure that prescription drug manufacturers stay in business — that’s where cures come from.”
Insurance Commissioner Katharine Wade, who initially expressed concern about the original version of the legislation, said they worked with Scanlon “on this important consumer protection that increases transparency.”
The bill also had the support of AARP Connecticut and its 600,000 members.
“Unfortunately, retail prices for 268 widely used brand name prescription drugs increased by 15.5 percent, according to AARP research in 2015,” AARP said in public hearing testimony. “In contrast, the general inflation rate was 0.1 percent over the same period.”
Opposing the legislation during the public hearing was the Pharmaceutical Care Management Association (PCMA).
“HB 5384 calls for revealing drug rebates negotiated between PBMs and manufacturers, in response to the concern that drug prices are rising and likely under the mistaken belief that this type of transparency would benefit consumers,” PCMA Vice President April Alexander said.
“Price concessions, in the form of rebates, negotiated by PBMs on behalf of plan sponsors, such as large employers, government programs, and insurers, significantly lower the cost of drugs,” Alexander testified.