Citing a lack of support, Sen. Chap Petersen, D-Fairfax, on Monday withdrew legislation aimed at controlling prescription drug prices in Virginia.
A Senate committee unanimously backed Petersen’s request to delay the bill until next year’s session. The legislation would have created a Prescription Drug Affordability Commission with the power to review sudden price increases and set a maximum limit on what pharmaceutical manufacturers could charge patients for drugs.
A handful of states including neighboring Maryland, created similar councils to regulate pharmaceuticals as a public service. Although monitoring may be structured in a in various waysPetersen’s bill would have triggered price reviews for brand name drugs that entered the market with a wholesale cost of $30,000 or more per year, or saw a wholesale price increase of $3,000 or more over a 12 month period.
“Faced with the costs of a lot of drugs is quite shocking, I can tell you that,” Petersen said at a press conference on the legislation earlier this month. “And the increase in prescription drug costs has far exceeded inflation.” By monitoring prices and capping seemingly unjustified cost increases, review boards aim to protect consumers from sometimes massive hikes on essential drugs such as insulin.
The legislation has been widely supported by advocacy groups, including the Coalition of Virginians for Affordable Medicine and Virginia Chapter of AARP. However, pharmaceutical companies have fiercely opposed it, including Pfizer, which has developed a advertising campaign against the invoice.
Petersen described other powerful lobby groups, including the Virginia Association of Health Plans and the Virginia Hospital and Healthcare Association, as “ambivalent” to the legislation – another obstacle to its passage. And similar efforts have seen strong Republican opposition, including in Maryland, where Governor Larry Hogan initially vetoed efforts to fund the state’s recently formed Affordability Council.
As a result, Petersen said he would need overwhelming Democratic support for the bill in the Senate, where the party holds a slim majority of 21 to 19. The tie votes are broken by Republican Lt. Governor Winsome Sears.
“To pass a bill like this, I would need 100 percent Democratic support,” Petersen said after the vote. “And I just wasn’t there.”
As a relatively new model, it remains unclear to what extent affordability councils are able to control drug costs. The wholesale price of drugs, set by manufacturers, is often used to set co-payments and consumer out-of-pocket costs. But insurance companies also play a role in pricing by working through pharmacy benefit managers, or PBMs — intermediaries who negotiate costs with manufacturers.
Many large insurers now have their own PBMs and frequently receive discounts in return for listing certain drugs on the list of drugs that companies are willing to cover. Therefore, it can be difficult to determine how much consumers are actually paying.
There is also the risk that manufacturers will exit markets that opt for regulatory pricing, or that insurers will remove capped drugs from their formularies, affecting consumer costs and treatment.
“The problem with all of this is that you end up confusing health care economics with ethics and politics,” Dr. Harry Gewanter, associate clinical professor of pediatrics at VCU, told the Mercury the last summer.