Drug companies are facing a new campaign to contain treatment costs, this time with proposed rules in Massachusetts that would include a first-in-the-nation cap on some prices.
An alliance of lawmakers, consumers, and health insurers is pushing for a law that would force biotechnology and pharmaceutical companies to justify their prices by disclosing how much they spend on research, production, and marketing. It also would allow the state’s Health Policy Commission to limit the prices of especially costly drugs, something not done anywhere in the country.
“Drug prices are by far the fastest-growing part of health care costs,” said Brian Rosman, research director at Health Care for All, a Boston consumer advocacy group that helped draft the Massachusetts bill. “The whole system is a black box. There is very little ability for consumers who go to a pharmacy and pay a copay to understand whether it’s a fair price.”
Similar “transparency” legislation has been filed in New York, California, Pennsylvania, Texas, North Carolina, and Oregon, though the specifics of each bill vary.
One driver of the effort has been America’s Health Insurance Plans, the national insurance trade group.
The efforts come amid a growing backlash against price tags of tens of thousands or hundreds of thousands of dollars a year for some medicines that treat cancers and rare diseases.
Last month, a group of prominent doctors and scientists objected to a $259,000 annual price set by Boston’s Vertex Pharmaceuticals Inc. for a new cystic fibrosis drug. The same week, in a medical journal, more than 100 leading oncologists protested a rise in cancer drug prices.
Sanofi SA and Regeneron Pharmaceuticals Inc. last month priced their new cholesterol-lowering drug at $14,600 a year, twice as much as many health plans had anticipated.
“We need to get under the hood and understand what goes into these prices,” said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group for health insurers that worked with Health Care for All on the transparency bill.
Representatives of the pharmaceutical industry, which is opposing the bills, say the Massachusetts legislation would dampen incentives for companies to develop lifesaving and life-extending therapies. They say drugs represent just 10 to 12 percent of health care costs and often save money by keeping patients out of the hospital.
“Implementing price controls would have a very negative impact on innovation in the marketplace,” said Robert Zirkelbach, senior vice president at Pharmaceuticals Research and Manufacturers of America, a Washington-based trade association known as PhRMA. “It would send a signal that risk-taking would not be rewarded.”
Robert Coughlin, president of the Massachusetts Biotechnology Council, said the cost analysis called for in the state Senate bill — which would be required of all drug makers selling products in Massachusetts — would be “impossible to achieve” because of the complex nature of drug research. He said the requirement would divert resources from the discovery of new therapies and punish an industry that is key to the state’s economy.
“It just raises the administrative burden on the innovative companies here in Massachusetts that are responsible for economic growth today and in the future,” Coughlin said.
The bill introduced in the Massachusetts Senate, where an October committee hearing is planned, contains some of the toughest measures proposed in any state against high drug prices.
It would empower the state Health Policy Commission to develop a list of critical drugs that are widely prescribed that affect the cost of public health programs, and that could help lift overall medical spending in Massachusetts above a state benchmark limiting increases to 3.6 percent.
The bill cites “substantial public interest” in what goes into the prices of such medicines. Drug makers would be required to disclose, among other things, their development and marketing outlays, how much research was paid for with public funds, their manufacturing costs, and the prices of their drugs in other countries. It would also empower the commission, which is charged with holding down health care costs, to impose cost controls on some high-priced drugs.
“The public is fed up over these drug prices,” said Senator Mark C. Montigny, Democrat of New Bedford, the bill’s lead sponsor. “You’ve got a situation where people are hurting so badly over the price of these drugs — the patient community, the employers, the insurers.”
Some patients are eagerly backing the bill.
Among them is Caitlin O’Brien, 24, who is struggling with Crohn’s disease, drug-induced lupus, and rheumatoid arthritis — as well as with the prices of her medicines. In the past month, her out-of-pocket costs — those not covered by insurance — topped $900 for more than a dozen prescription drugs. She is out of work on disability and living in Newton with her parents, who provide financial help.
“My short-term disability check is $432 a week,” O’Brien said. “It doesn’t even cover my meds.”
But not all patients support the legislation.
Andover retiree Jack Whalen, 66, takes a three-drug combination at an infusion center in Dana-Farber Cancer Institute to treat his rare blood cancer. Because his medicines are taken through infusion rather than in pill form, his Medicare insurance covers them without him having to pay out of pocket. Whalen said the problem is not the cost of drugs but insurers shifting more of the cost to patients in many cases.
“Legislation like this would unwittingly shoot ourselves in the foot,” he said. “It sets up an adversary relationship between the biopharma industry and the lawmakers here in Massachusetts.”
The cost-transparency bill, which has 17 cosponsors in the Legislature, would expand the power of the Health Policy Commission. The agency, created in 2012, is known for scrutinizing proposed hospital mergers that could drive up costs. Its reports helped scuttle the proposed acquisition of South Shore Hospital by the Partners HealthCare system last year.
With many insurers calling for a shift to so-called pay-for- performance reimbursing — or tying a drug’s price to how well it works for patients — the type of cost analysis called for in transparency bills will probably become a greater focus of debate in the medical world.
“We want to be able to dig into the real costs of the drugs that are coming to market,” said Pellegrini, of the state health insurers trade group. “While we understand many of these drugs are great medical advances, we’re also concerned about whether these costs are sustainable for the long term.”
Correction: An earlier version of this story had the incorrect age for Caitlin O'Brien. She is 24.