New Law Calls For Drug Price Transparency, But This Pharmaceutical Company Says No Way
It may not shock you that the United States does not have regulations on prescription drug prices. Some drugs are reasonably priced due to sufficient competition or available generics, but no such luck for those who need for life-sustaining insulin. The cost of insulin has tripled from 2002 to 2013, and the devastating rate hikes often come without warning.
A new law in California calls for greater transparency between drug companies and drug purchasers in hopes of discouraging continued prices increases, especially for insulin. But Eli Lilly, one of the three pharmaceutical companies that control almost all of the insulin in the US (the other two are Novo Nordisk and Sanofi), says that they won’t be complying with the new law.
According to the LA Times, other pharmaceutical companies are working within the new guidelines, but Eli Lilly says that they’re waiting for an industry lawsuit challenging the constitutionality of California’s new law to be resolved before taking action.
The Pharmaceutical Research and Manufacturers of America lobbying group (PhRMA) is currently suing California at the federal level, saying that the new law violates the commerce clause of the US Constitution by seeking to regulate drug prices beyond state borders. Further, PhRMA argues that requiring drug manufacturers to justify their price increases violates their First Amendment rights by requiring them to speak.
According to a 2010 Supreme Court Ruling, corporations such as Eli Lilly have the same First Amendment rights as individuals. Whether or not the law violates those rights will be up to the court’s interpretation of the text of the First Amendment.
But pharmaceutical companies aren’t the only ones frustrated with the new law. Critics on the other side of the spectrum say it doesn’t go far enough.
Under the new law, drug manufacturers have to inform insurers and certain state agencies about price increases that will amount to over 16 percent over two years, but only for medications with a wholesale cost of more than $40 for a course of therapy. The reason for the increase must be explained, and manufacturers have to tell healthcare buyers about new drugs that will cost over $10,000 a year or for one course of treatment.
However, drug manufacturers are not penalized for high prices, and some experts are disappointed that there’s not more bite to the regulations.
Lawmakers hope that the regulations will encourage lower prices, or at least discourage higher ones, and supporters say the new requirements may have influenced some recent decisions to lower drug prices. But it is not clear at this point what, if any, long-term effect the law will have—except to prompt the suit against California by PhRMA.
California State Senator Ed Hernandez (D-West Covina), who wrote the new law, was not amused when Eli Lilly asked for California lawmakers to publicize their new helpline for people struggling to afford their insulin.
“I should promote to my constituents a company that’s breaking the law and raising prices?” Hernandez said in an interview with California Healthline. “Insulin has been around for decades and there hasn’t been any new innovation. Why not just lower the price so we can all afford it?”
Senator Hernandez wrote a letter to Eli Lilly’s chief executive, telling him that: “Your company’s egregious defiance of state law makes your promotion of a ‘Diabetes Solution Center’ even more disingenuous and offensive.”
Senator Hernandez did not receive a response to his letter—just as many who need insulin to live haven’t received a response to their questions about price increases for years.
According to CBS News, five US states and a federal prosecutor are investigating insulin manufacturers and pharmaceutical middlemen regarding their business relationships and rising drug prices.
Eli Lilly, Novo Nordisk, Sanofi and CVS Health are all under investigation regarding possible collaboration to increase their profits. Some individual attorneys are also bringing class-action suits against the companies. Attorney Steve Berman, known for winning a multibillion-dollar settle against big tobacco, said it’s time to break up the “insulin racket.”
There are those waiting in pharmacy lines across the country right now that think that time is long overdue.