How to bring transparency to prescription drug prices?

Montana lawmakers are considering a bill that supporters say would bring more clarity to prescription drug prices and eventually lead to lower costs. 

The Senate Business, Labor and Economic Affairs Committee heard testimony Friday on Senate Bill 137, which would improve prescription drug pricing transparency. Under the proposal, prescription drug makers would be required to file an annual report with the state disclosing the wholesale price of any drugs sold in Montana. Manufacturers would also be required to provide reasons for price increases if the cost of a drug jumps by 10% or more in a single year or 30% or more over the prior three years. 

 The bill’s sponsor, Sen. Steve Fitzpatrick, R-Great Falls, told the committee those requirements would lead to increased competition among drug manufacturers and, eventually, lower prescription costs for Montanans. He added that prescription drug costs are one of the biggest factors driving up health care expenses. 

“The reason for this is quite simple,” he testified. “Information about prescription drugs, I think, will help consumers make better-informed choices about the costs and will certainly allow insurance companies to have a better handle on how they negotiate prices, which hopefully should reduce the cost of prescription drugs.”

But Dennis Iverson, speaking for the Pharmaceutical Research and Manufacturers of America, said the new regulations wouldn’t lower prescription drug costs for consumers for several reasons. 

For example, a more comprehensive proposal that includes a requirement that health insurers disclose to the state whether they received a rebate for including a company’s drug in their list of covered prescriptions and how much of the savings are — or aren’t — passed on to consumers would be a good start, he said. In addition, he said, many countries with lower costs have price caps on prescription drugs, forcing pharmaceutical companies to hike prices on U.S. consumers. 

And much of the disclosed information the bill would require is already publicly available through other states that have enacted similar legislation, Iverson added. 

“This is a hugely complex question. And one that really does need some consideration,” he said. “This isn’t the bill to do it. The reason we oppose it is that it doesn’t really do anything that brings actual relief to the consumer.”

States have increasingly debated legislation to lower the cost of prescription drugs or better educate consumers, according to the National Conference of State Legislatures. Without “meaningful” legislation at the federal level, states like Colorado, Texas, Maine and Washington have enacted legislation similar to SB 137, said John Doran of Blue Cross and Blue Shield of Montana. He added that Americans pay the highest prescription drug costs in the world.

“Montana should not sit on the sidelines and watch our consumers continue to be charged exorbitant prices for prescription drugs,” Doran testified Friday. 

Supporters testifying for the bill on Friday also included Montanans with chronic health problems like diabetes who said expensive prescriptions sometimes force them to ration medicine or choose between medication and other necessities. 

A similar measure failed during the Legislature’s 2019 session. Then-Gov. Steve Bullock also vetoed a bill that would have required pharmacy benefit managers — liaisons between insurance companies and drug manufacturers in price negotiations — to pass along any rebates they receive from manufacturers to insurance companies, which would then have to use those savings to reduce costs for consumers. While supporting the goal of lowering drug costs, Bullock said the bill would have actually raised costs for Montanans. 

A provision in SB 137 would require pharmacy benefit managers to tell insurance companies how much they paid for a prescription drug, how much they charged the insurance company and whether they received a rebate, but that information would not become public. 

The committee didn’t vote on the bill Friday.