Michigan Association of Health Plans

Rising prescription drug costs likely to be revisited in Lansing

On the surface, the position appears completely counter to what a business organization would typically advocate.

Yet the ever-rising costs for prescription medications has led the Grand Rapids Area Chamber of Commerce to support requiring pharmaceutical companies to explain certain increases in drug prices, the costs to research, develop and manufacture a drug, and how much it invests in clinical trials.

That kind of transparency — embedded in a state task force’s report on drug costs — would begin to create greater public understanding on how prescription drugs are priced as health care costs remain a top concern for employers, said Andy Johnston, vice president of government affairs at the Grand Rapids Chamber.

“We’re unique (among) business groups with this position,” he said. “When it comes to health care costs, it’s a significant burden on American businesses and it places us at a disadvantage in the global marketplace. Also, given the amount of taxpayer dollars spent on these, it seems like a reasonable regulation to support.”

That’s why the Grand Rapids Chamber last year backed statewide legislation to require pharmaceutical companies to report an itemized account of what goes into a drug’s price when its wholesale or treatment costs exceed $10,000 in a year. The report to the Michigan Department of Health and Human Services would have required the total costs for making and distributing the drug, R&D costs by the company or a third party or the cost of acquiring the drug, and what the firm spent on its marketing and advertising.

Transparency needed

Transparency on drug prices and how they are set remains the top legislative priority for the Michigan Association of Health Plans (MAHP), which represents HMOs in the state.

The MAHP has long advocated for greater transparency in drug costs, said Executive Director Dominick Pallone.

“At the end of the day, there’s only one entity that sets the list price, and that’s manufacturers. At the very beginning of the price-setting issue are manufacturers,” Pallone said. “This is the only product that I know of that the longer it’s available, in some cases, the prices go up.”

While supporting greater price transparency, the MAHP would object to greater regulations on PBMs that act as a go-between and negotiate pricing between pharmaceutical companies, health plans and pharmacies.

“PBMs are an important player for our industry right now. They help bring size to the negotiation with pharmacies on one end of the equation, and negotiation with manufacturers and wholesalers on the other end of the negotiation,” Pallone said. “Without PBMs our prices would be higher.”

This article originally appeared in MiBiz, read more here.