Colorado lawmakers seek further drug price transparency reforms

PROMO 64J1 Health - Drugs Pills - iStock - Oleg Elkov
Published Thursday, January 23, 2020

By Michael McGrady | The Center Square

Democrats in both of Colorado's legislative chambers on Tuesday introduced a bill to further reform drug pricing transparency.

The bill, called the Colorado Prescription Drug Transparency Act of 2020, has two primary intentions, the lawmakers said. First, the bill seeks to provide state regulators with data needed to understand and address the cost of prescription drugs from pharmaceutical firms. 

Second, the bill would provide immediate relief to health care consumers by ensuring that rebates insurance companies get from drug manufacturers will be passed along directly to ensure a reduction in premiums across the board. 

"This is bill is a part of a comprehensive approach to improve healthcare by defending our friends and neighbors from the excess corporate profit that forces them to jeopardize their health," said bill sponsor Sen. Kerry Donovan, D-Vail. "We are committed to joining together to fight for all Coloradans so that they can get the care they need."  

Donovan is joined by Sen. Joann Ginal, D-Fort Collins, and Reps. Dominique Jackson, D-Aurora, and Dylan Roberts, D-Avon.

This bill will also bring to light the complexities of the financial relationship between drug companies, pharmacy benefit managers, insurers, and health care consumers.

"By revealing how the currently hidden pharmaceutical supply chain operates, policymakers can better determine and address the key factors that are driving up the costs of prescription drugs," a press release from House Democrats said. 

By 2021, health insurers will be required to submit detailed information to the state commissioner of insurance about the top 50 most costly and most used prescription drugs covered under their plans. These details will require insurers to again disclose rebates from drug manufacturers, and drug costs are accounted for in insurance premiums.

Drug manufacturers will also have to notify regulators when they need to increase the price of certain drugs with the specific reasons for the price change. Other provisions in the bill would request regulators to reduce drug prices progressively throughout a given year.

"With new transparency laws, our state will force Big Pharma to shine a light on what drives up the cost of medication, so we can ensure accountability for our communities," Ginal said.

Outside of the state, price transparency measures are supported by bipartisan coalitions of state and federal lawmakers. For example, U.S. Congress unanimously supported two bills in October that would require more disclosure of the discounts drug manufacturers give to pharmacy benefit managers. 

One bill would have required the Department of Health and Human Services to post aggregated data from Medicare and the Obamacare exchange plans. The other would provide rebate data to Congress to help lawmakers better understand how the drug market operates. 

The Colorado Prescription Drug Transparency Act has similar provisions. Democrats tried to advance similar proposals during the 2017 and 2018 legislative sessions. The then Republican-held Senate stalled the bills, though. 

Democrats advanced a similar proposal last legislative session. However, the bill died because lawmakers ran out of time in the 2019 legislative session. 

Last year, Colorado became the first state in the nation to implement a law limiting insulin costs. Another recent law also requires the disclosure of drug list prices and other information. This session's new bill advances these actions by requiring a degree of greater detail in the flow of the drug supply chain.

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