My committee hearing comments on House Bill 3493 recently went viral (see below). The bill’s “Prescription Drug Affordability Act” title sounds nice in theory, but in practice proposed taxing pharmaceutical manufacturers (based on their total revenues as a percentage of the state market) to fund a new state bureaucracy, appointed by political insiders, who would divine a “fair” price for thousands of medications.
I am passionate about increasing access to medicines for all people – especially those with limited means – but we don’t need another opportunity to fund insider corruption. The law couldn’t actually deliver more affordable prices; instead, it tried to impose illegal price controls, and gave manufacturers an excuse to raise prices due to their increased compliance costs.
In Illinois, we initially spend $1.9 billion on pharmaceuticals. This includes $286 million for diabetes; $212 million for HIV/AIDS; $199 million for asthma; $105 million for arthritis; and $102 million on cancer drugs. Thankfully, Illinois Medicaid and Medicare and veterans patients already get some of the lowest drug pricing nationwide.
Why then do we still feel so out of control when it comes to pricing? One reason is the extent to which states have surrendered their power and control to the federal government.
If we want to lower consumer costs, we need more market competition and private-party accountability at every level of the supply and distribution chain. Unfortunately federal law is rife with opportunities to exploit the market to consumers’ disadvantage. For example, some companies exploited the Orphan Drug Act’s noble purpose of incentivizing new drugs for rare diseases with a market exclusivity period. They enticed the FDA to give a monopoly to old drugs already on the market. It took years of using the federal law tools available – patent, antitrust, FDA regulatory, NAFTA unfair competition, whistleblower claims, and Federal Trade Commission actions—to undo this.
The federal restrictions have also created a market where the published price of a drug is rarely the actual price charged at the pharmacy. The State of Illinois alone receives over $900 million dollars—half of what the state spends on drugs—in the form of manufacturer rebates. There is an incredible amount of rebate money floating around in both state and private health care systems. Most of these rebates are negotiated by pharmacy benefit managers, insurers, drug manufacturers and pharmacies to lower the price of prescription drugs.
A resident whistleblower alerted me to one area of pharmacist benefit managers (abbreviated “PBM”) abuse. PBMs are supposed to negotiate lower prices for their customers, and pass the savings along to lower patient premiums. Many instead used complicated contract provisions to hide the manufacturer rebates; and avoid audit transparencies. I drafted HB 3187 to end this practice. The language empowers customers to render these types of contract terms unacceptable; void; and unenforceable in the State of Illinois. My solution – which didn’t require the creation of a new state bureaucracy – received strong bipartisan support from the members in our committee. It will help bring real-world savings to consumers.
There are ways we can do things better. I am grateful for the opportunity to put my knowledge and experience to work on your behalf, and to making HB 3187 become law. Sunlight will be the best disinfectant, and will help us stop companies from pocketing your rebate money. If you want to support this private sector solution to a public problem, support, please contact our office at (630) 852-8633 to find out ways you can support HB 3187.
The committee discussion Rep. Mazzochi is writing about was recorded by Illinois Channel: