triple dollar sign - red stencil text on a paper price tag against rustic wood

States Getting into Pricing Issues – Look Out Below!

Seems like every day we see new proposed legislation being introduced into another state’s legislature.  Each one seems to have a somewhat different methodology or focus for controlling and reporting on drug prices.  Let’s think about this.  Everyone wants to strive for lower drug prices.  Remember, in the early 1980’s, the entire nation was focused on reducing health care costs and the Drug Price Competition and Patent Term Restoration Act of 1984 (better known as the Hatch-Waxman Act) came along to address drug prices and associated health care costs while providing additional protections for band name drug products.  It was probably the most effective piece of legislation to reduce health care costs of all times.  Yet some 37 years later, the call for reducing drug prices and associated health care costs is again big headlines in the political and national debate.

The fervor of the voices now may even be greater than in 1984.  So what are we seeing now? Individual states are introducing legislation to try to control drug prices for their citizens.  Yes, individual states!  And how many states do we have?  Yes, 50!  Just think of what 50 different state laws addressing pricing would do the prices of pharmaceuticals.  Think of the costs placed on pharmaceutical companies that would need to administer and comply with 50 different state legislative initiatives.  Do you think those costs will be absorbed by the industry or passed onto the consumer?

We also see the national agenda taking a swipe at drug prices in two different ways – first by proposing expediting generic drug approvals to assure that multiple generic drug products are available as soon as possible to help reduce prices, but there is also national legislation to deal with what some have called “price gouging” and unreasonable prices increases.  Add this to the layers of potential state actions to deal with this pricing issue, and you have created a massive maze that firms must somehow navigate.

Maybe it’s time to take a step back and consider a single national policy to address the drug pricing  issue.  Hatch-Waxman was certainly successful and remains so despite some one-off problems (given the fact that there are tens of thousands of generic products on the market).  I would suggest that we take baby steps to include a priority review of generic application when there are fewer than 3 entrants into the market.  Also, industry must work with FDA to provide additional assistance to increase communications with generic firms to help assure that firms better understand the ever-changing regulatory and data requirements, and that such requirements provide a value added to the review and approval process.  FDA should also consider better partnering with industry to deal with establishing clear paths to approval for complex generic products.

Should price controls, reporting on pricing, and adding additional administrative reporting requirements be a proper first step?  It took several tries to get a Hatch-Waxman type bill passed in the 80’s.  I fear that a multi-focused approach with various factions racing to do something or anything to show that some action is being taken may do more harm than perhaps some minor tweaks to Hatch-Waxman and to the FDA review and approval process that could further expedite competition.  Remember, we live in a free market economy; perhaps we just need to give the free market some extra help and a chance to function in a more watchful environment.  The old KISS principle may be the best solution to what is a very complex problem.