Roberts: Why we need transparency in prescription drug pricing
I am going to start this month’s column with a hypothetical scenario: Imagine a cell phone made in the mid-nineties — a big clunky piece of equipment that had one function, to make and receive calls. These devices certainly were not equipped with fancy apps and a camera, let alone the ability to access your email or the internet. Yet, back then, the ability to make wireless phone calls was worth the price of that big, clunky cell phone. However, would you ever pay the price of the latest iPhone today for a 1990s cell-phone? No, of course not.
Well, that is exactly what is happening with our prescription drug market in the United States and it simply does not make any free-market, economical sense. For example, the cost of a vial of insulin has gone up from approximately $25 in 1996 to over $300 in 2019. That is an 1100% increase in price, all while the actual makeup of the medicine has not changed at all. That would be like paying 1100% more for that same clunky cell phone with absolutely no improvement in the technology. Except, the catch is, you either pay that exorbitant price or you do not live.
A pricing crisis
Prescription drugs are what keep many of us healthy, cure or keep disease in check, and help so many of us lead better lives. The companies that make them should be commended for their groundbreaking research and development that help bring new drugs to the market that help billions around the world every day. However, something has gone seriously awry with the way that pharmaceutical companies, drug middlemen, and insurance companies in America price the drugs we need. And it must be fixed.
Prescription drug prices have been on the rise for the last decade or more. Last year, 30% of Americans saw their daily medicine increase in price and more than one in 10 Coloradans did not fill a prescription because of cost. This crisis in price increases is not happening in any other country. Instead, Americans are paying nearly 100% more per capita for the exact same prescription drugs as compared to other developed nations.
Why is this? Well, the simple answer is: we do not know. Prescription drug companies, drug middlemen called pharmacy benefit managers, and insurance companies are not required to justify their price increases even in the face of massive profits in the United States while the rest of the developed world pays fractions of the price for the same drugs. In order to determine how to lower the cost of your medicine, we first need to figure out what exactly is happening.
A push for transparency
That is why earlier this year, I joined with three of my colleagues: Rep. Dominique Jackson and Sens. Kerry Donovan and Joann Ginal to introduce HB1160: the Colorado Prescription Drug Price Transparency Act of 2020 at the state legislature.
The prescription drug-pricing scheme is terribly complex. Not only is Big Pharma raising the list price of their drugs in the United States to questionably high levels, PBMs are unfairly distorting the market. Originally meant to create efficiencies in prescription drug purchasing, PBMs are now accepting rebates offered to them by pharmaceutical companies as an incentive to carry their drug. This only further increases prices because those rebates are pocketed by PBMs and insurance companies. We know Big Pharma is raising its prices and that PBMs and insurance companies are pocketing rebates, but we do not know how it is exactly impacting prices and what should be changed. That is why HB1160 needs to pass.
Not only will this bill shed light on all of this and give the state the transparency it needs, but best of all, it will provide immediate relief to Coloradans by requiring that insurers actually pass those rebates on to you, the consumer, by lowering your insurance premiums.
When this bill becomes law, Coloradans will not be left guessing why their prescription drug costs are increasing. Policymakers will have information to make informed decisions on how to lower prescription drug costs in the future. I believe in data-based legislating and this bill will be an important first step because it will give us the data we need to move forward towards solutions.
To hear more about this bill and others, please join me at my upcoming Eagle County Town Hall Meeting on Sunday, March 8 from 3:30 to 4:30 p.m. at the Avon Library. As always, you can also contact me anytime at Dylan.Roberts.House@state.co.us or my cell: (970) 846-3054.
Representative Dylan Roberts represents Colorado House District 26, encompassing Eagle and Routt counties.