House committee approves bill to cap drug prices

House committee approves bill to cap drug prices

By Marianne Goodland (May 20, 2021)

While the big fight on healthcare in the 2021 session has been focused on the Colorado Option bill, a fight that hasn’t gotten as much attention but is almost as big is being waged over prescription drug costs.

While everyone acknowledges that prescription drugs are becoming more unaffordable, there was plenty of argument on both sides about whether Senate Bill 175 is the best way to address it.

SB 175 was reviewed Wednesday night in a five-hour hearing with the House Health & Insurance Committee. That’s after the bill got an eight-hour hearing in the Senate Health & Human Services Committee back in March, along with dozens of amendments from sponsors and opponents and a two-hour floor debate in the Senate almost two months later, on May 6.

What the bill does: beginning Jan. 1, 2022, the bill makes it illegal to buy a prescription drug at a cost that exceeds the price cap established by the new five-member Prescription Drug Affordability Review Board. The state board, to be appointed by the governor no later than Oct. 1 and confirmed by the state Senate, would set an upper payment limit for a dozen prescription drugs per year for three years, for a total of 36 drugs. Board members must all have advanced degrees and expertise in healthcare economics or clinical medicine.

Insurance carriers and pharmacy benefit managers must report to a state database, known as the “All-Payer Health Claims Database,” the top 15 most expensive drugs paid for by insurance carriers, as determined by total annual plan spending; the top 15 drugs that account for highest increase in total annual spending, the top 15 drugs that caused the greatest increase in insurance premiums, and the top 15 drugs that the carrier paid for most frequently and/or which earned the biggest rebates from manufacturers.

Carriers and PBMs also must report total spending for brand-name drugs and generics, and drugs administered by hospitals in both in- and out-patient settings.

That information will be used to review the drugs for which the board will set price caps.

Bill sponsors Reps. Yadira Caraveo, D-Thornton, and Chris Kennedy, D-Lakewood, noted the bill has a five-year sunset, so that group of 36 drugs with price caps may be the only ones that are reviewed by the board in its first five years.

And while “orphan” drugs, which are used to treat rare medical conditions and may be exorbitantly expensive, are exempt under the bill, other expensive (and life-saving) medications are not. And that’s what drew dozens to the hearing Wednesday night, to warn that their lives could be put at risk if they can’t get the medications they need for cancer or cystic fibrosis, for example.

On the other side, patients with long-term conditions, such as multiple sclerosis, testified that their medications are so expensive that in some cases they break up doses or aren’t taking them at all.

“We are not here to demonize the pharmaceutical industry, but we are here to try to correct a market failure,” Kennedy said at the beginning of the hearing. As to claims made by pharmaceutical companies that research and development are big cost-drivers for drugs, Kennedy said he believes those costs are based more on what the market will bear. He recounted the story of a family friend with cystic fibrosis, who has now lived to the age of 39, well past what was expected.

“I am thankful for these drugs that are changing their lives, but some of these drugs are bankrupting families at the same time,” he said.

He also claimed nine out of 10 of the largest drug companies spend more on marketing than on researching new medicines as well as millions of dollars on lobbying. Kennedy said he believes wholesalers, the so-called middle man between pharmacies and manufacturers, will pay less for drugs, responding to the price caps, and will be reimbursed by the manufacturers for the difference.

“We really don’t believe that in-state purchasers are stuck in the middle in this bill,” Kennedy said.

However, not one witness confirmed that claim, and no one representing wholesalers testified at the hearing.

Kim Bimestefer, executive director of the state Department of Healthcare Policy and Financing, testified that high-cost drugs are the leading cause of the overall healthcare cost crisis. Less than 2% of drugs prescribed in Colorado consume 50% of the overall prescription drug budgets for Medicaid and employers, she claimed.

And while Kennedy said he wasn’t out to demonize the pharmaceutical industry, Isabel Cruz of the Colorado Consumer Health Initiative had no trouble doing so.

“Drug manufacturing companies spend billions of dollars a year on marketing and advertising and pay enormous fines from unethical business practices. Even in the midst of a pandemic, they have continued to choose profit over people and increase prices well beyond the rate of inflation,” she told the committee.

The committee also heard from patients who struggle to pay for prescriptions.

Mike Russell of Highlands Ranch, representing the national Multiple Sclerosis Society, has primary progressive MS. He has to support his family on a $20-per-hour job and prescription costs at $5,000 per year. He estimated that 40% alter their medication doses or stop taking them completely because of cost. He gets an infusion twice a year, and last year it was $32,000 per infusion. The cost increased to $35,000 in 2021, and his out-of-pocket cost was $5,000.

“I urge you to help pass the bill and stop the choices of feeding your family or taking your prescribed medications,” he said.

One witness from Ridgway testified that her son has a rare autoinflammatory disorder with prescription drug cost at $5,000 per month. Her husband’s insurance covered it, until the costs went up so much that their claims were denied. They had to switch to a drug that was covered under the insurance, but that meant the medication that made the greatest impact on his condition was not covered.

SB 175 passed on a party-line 8-4 vote and was sent to the House Appropriations Committee.


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