House panel hears bill aiming to stop ‘excessive’ increases in drug prices

Price gouging. Extortion. Greed. Unconscionable. Fear. Financial ruin. Bankruptcy.

Those were some of the words used during the hearing of a bill that would prohibit a drug manufacturer from imposing an excessive price increase on the sale of any generic or off-patent drug.

“No one should have to choose between paying the mortgage and paying for their children’s medication,” said Rep. Zack Stephenson (DFL-Coon Rapids).

Rep. Zack Stephenson

He sponsors HF1183 that was discussed by the House Commerce Finance and Policy Committee Tuesday and held over due to the meeting running beyond its allotted 90 minutes. Members heard testifiers, approved the sponsor’s delete-all amendment and a technical amendment, and is scheduled to take the bill up again Wednesday or Friday.

The companion, SF1265, sponsored by Sen. Rich Draheim (R-Madison Lake), awaits action by the Senate Health and Human Services Finance and Policy Committee.

“My bill addresses situations where prescription drug prices are high, not because of the free market, not because of research and development costs, but because of greed,” Stephenson said.

The bill would allow the state to penalize drug manufacturers from imposing an “excessive price increase,” defined when:

• the price increase, adjusted by the Consumer Price Index, exceeds: (a) 15% of the wholesale acquisition cost over the immediately preceding calendar year; or (b) 40% of the wholesale acquisition cost over the three immediately preceding calendar years; and
• the price increase, adjusted by the CPI, exceeds $30 for a 30-day supply, or course of treatment lasting less than 30 days.

The bill would empower the attorney general to ask a judge to impose a civil penalty of up to $10,000 each day that a manufacturer charges an excessive price for a prescription generic or off-patent medication.

Peter Fjelstad, senior director of state policy of the Pharmaceutical Research and Manufacturers of America, said the bill “incorrectly assumes that manufacturers determine what a patient pays at the pharmacy.”

He said the proposed legislation would ignore the role insurers, pharmacy benefit managers, wholesalers, and the government play in determining drug prices and drug coverage.

Brett Michelin, senior director of state government affairs at the Association for Accessible Medicine, said generic and off-patent medications are not the ones driving up drug prices, but rather the blame belongs on brand-name drugs under patent protection.

Stephenson said the bill is narrowly focused to act in concert with other House proposals on controlling high drug prices such as HF8, sponsored by Rep. Tina Liebling (DFL-Rochester), which would permit the state to establish a prescription drug purchasing program, and HF801, sponsored by Rep. Kelly Morrison (DFL-Deephaven), which would establish a Prescription Drug Affordability Board and a related advisory council to review the cost of prescription drugs and set upper payment limits for drugs.