Colorado lawmakers aim to add more transparency to prescription medication costs with set of bills

Colorado lawmakers aim to add more transparency to prescription medication costs with set of bills

Posted: 4:44 PM, Feb 17, 2020
Updated: 8:54 PM, Feb 17, 2020

Rep. Dominique Jackson (D-Aurora)


DENVER — After Colorado state lawmakers successfully passed a law last legislative session to add more price transparency into hospitals, this year, they’ve introduced legislation to add transparency to prescription medication costs.

House Bill 1160, otherwise known as the Drug Price Transparency Insurance Premium Reductions bill, is co-sponsored by Rep. Dominique Jackson, who says she has seen her own prescription prices go up in the past and understands the burden this can place on families.

Everybody I know is talking about how they cannot afford their health care, and I’ve had neighbors come to me and say, ‘Look I’m going to forgo taking my prescriptions because I have to pay my rent,’” Rep. Jackson said.

Nationwide, prescription medications make up about a quarter of the money spent on health care, according to the Association of Health Insurance Plans.

“We have to address the rising costs of prescription drugs. Everybody’s talking about it but there’s a lot that’s actually being done. This bill would require drug manufacturers, insurers and pharmacy benefit management companies, which are often like your mail-order pharmacies, to report certain information about their high-cost drugs,” Rep. Jackson said.

That information would be reported to the Division of Insurance and kept confidential. The agency would then use the information to put out a report on its website to help consumers understand which medications are seeing price increases.

It would also report back to the legislature to help lawmakers understand what is happening with pricing so that they can craft legislation to address it. Rep. Jackson says this bill is just a first step to help understand the challenges.

“The problem right now is nobody really knows what is happening,” she said. “So, we are going to get the real picture and then we are going to make real decisions and we’re going to have an impact on people’s lives.”

One issue in particular the bill would look at is how much is spent on marketing some of the most expensive medications versus research and development.

“Those are the kinds of things we believe are driving up the costs of drugs,” she said.

Over the summer, the Department of Health Care Policy and Financing put together a report on reducing the cost of prescription drugs in Colorado. The report attributed the high cost of medications to a lack of transparency, anticompetitive practices and marketing and lobbying investment.

The Pharmaceutical Research and Manufacturers of America, meanwhile, says it’s important to pay attention to the entire supply chain.

“We believe any attempt to study the pharmaceutical supply chain must look at the long line of middlemen collecting a significant portion of what patients pay for medicine,” Nick McGee, the director of public affairs for PhRMA, said in a statement.

HB20-1160 would also require health insurers to pass rebate savings on to consumers by lowering premiums based on the rebates they receive from manufacturers for medications. Rep. Jackson believes consumers might see the difference quickly if the bill passes.

“Rebates, we believe, are traded between the manufacturer, the insurers and the PBMs (pharmacy benefit managers). So, it’s sort of like fake money that we don’t exactly know where it goes. We want those rebates, those discounts to be delivered directly to the consumer and lower premiums across-the-board,” she said.

The passage of the bill would allow for lawmakers, for the first time in the state, to get a close look at the entire supple chain and how manufacturers, insurance carriers and pharmacy benefit managers interact with one another when it comes to pricing, according to Rep. Jackson.

“We are continuing to work with the sponsors of HB 1160 and other stakeholders across the health care system on meaningful solutions that ensure patients are benefiting from the significant rebates manufacturers provide, give patients the information they need and protect the competitive market,” McGee said in his statement.

However, it is not the only bill that was brought up this legislative session to address medication pricing.

House Bill 1078 would prohibit pharmacy benefit managers from requesting retroactive fess on medications after the prescription has already been filled.

Senate Bill 107, meanwhile, calls for an analysis of prescription drug manufacturer data on 20 of the costliest prescription drugs. The bill first requires manufacturers to report drug production cost data to the Department of Health Care Policy and Financing.

The agency would then analyze the data to provide a report to lawmakers on what causes the high costs. The bill also specifies that manufacturers who fail to turn over the data would be subject to a civil penalty of up to $10,000 per day.

The House Finance Committee is set to debate the drug price transparency bill on March 2.