This Could Make Your Head Spin

Seems like almost every day a new Federal or State law is proposed to deal with drug pricing for both brand and generic pharmaceuticals. .  The latest entries that appear to be making progress through the legislative process are from the states of Washington and Nevada. One can just imagine that there are specific differences in all the state and federal bills floating around, and drug firms will likely be required to comply with all of them (see previous post here). As these processes move forward, I think I can hear the turning of gears grinding together and just hope they don’t break the entire system.

Generating the data to comply with these statutes and regulatory requirements is likely going to drive pharmaceutical companies crazy and create a lot of additional work.  It seems like many of the proposals have provisions for a “tax” or “penalty” for raising prices above a certain level.  In trying to hold down costs, making a system where both the State and the Federal governments are going to require significant new reporting can do nothing but raise prices.  Hiring additional staff to collect the data and perform the reporting is just the tip of the iceberg.  Many larger companies with large infrastructures may not feel the pain as much, but smaller companies faced with potential increases in User Fees, tracking all requirements, and complying with such requirements are likely to be hit harder.  In addition, penalties, fines, and taxes assessed will likely cause additional pain to the bottom line.  If some of the smaller firms drop out of the mix, then what happens to competitive prices in the marketplace?

I wish I had a crystal ball to see how the intersection of each of these forces is going to translate into equitable pricing (and that assumes we know what the definition of equitable pricing is), but I worry that there might be a crash at the intersection that no one really saw coming.