February 23, 2017
To:Chairman and Members of House Health and Government Operations Committee
From:Henry Bogdan, Public Policy Director
Re:House Bill 631 – Public Health – Essential Generic Drugs – Price Gouging - Prohibition
House Bill 666 – Public Health – Expensive Drugs – Manufacturer Reporting and Drug Price Transparency Advisory Committee
Position:SUPPORT
House Bill 631 would prohibit price gouging in the marketing of certain generic drugs, authorize legal action by the Attorney General to restrain or enjoin violations, as well as provide for imposition of a civil penalty for violations. House Bill 666 would require annual reporting by manufacturers of “expensive” drugs of information affecting the costs and incentives related to developing, producing and marketing those drugs, to the Secretary of Health and Mental Hygiene. Because unwarranted price increases have been demonstrated to seriously restrict access to important pharmaceuticals for many in need of their treatment, Maryland Nonprofits urges the passage of both House Bill 631, and House Bill 666.
The egregious cases of EpiPen, Naloxone and Daraprim, as well as the aggregate impact of rising pharmaceutical costs on the overall cost of health care, clearly show the need for greater transparency and regulation, at least on the limited classes (name brand, specialty and essential generic) of drugs covered by these two bills. The important goal of assuring access to quality and effective health care for all Maryland residents will be seriously jeopardized if recent pricing trends continue.
Moreover, in judging the importance of passing legislation now, not only the impact such excessive pricing has on the health or financial well-being of individuals, and the additional burden these prices add to the cost of health care and insurance coverage, need to be considered.
The high cost of health care is a competitive disadvantage internationally for our economy. In addition, we now see critical programs such as Medicare and Medicaid being viewed as sources of budgetary savings by the Congress and the Executive branch. The prospect of state or local governments having to assume the lion’s share of future cost growth in those programs, or having those costs placed on already financially strapped families and individuals, becomes an even worse fiscal nightmare if pharmaceutical costs are allowed to continue on their current price curve.
We are aware, as some opponents of these bills point out, that the ‘end-user’ price is also impacted by others in the distribution chain of pharmaceuticals. While they argue that this complexity is a reason not to pass this legislation, if anything we believe it makes the bills more important.
If we accept that some pricing is excessive at the end of the distribution chain, the very complexity of the system argues in favor of greater transparency. And the logical point to begin addressing this need for transparency should be ‘upstream’, at the beginning - the sources of the pharmaceuticals being distributed.
That price increases, sometimes obviously exorbitant, are creating serious health and economic problems that threaten the public interest seems beyond debate, and these bills are a logical step to protect the public interest.
For these reasons we strongly urge a favorable report on both House Bills 631 and 666.
1