Senate committee scraps legislation aimed at controlling prescription drug costs

Citing a lack of support, Sen. Chap Petersen, D-Fairfax, withdrew legislation on Monday aimed at controlling prescription drug prices in Virginia.

A Senate committee unanimously supported Petersen’s request to carry the bill over to next year’s session. The legislation would have created a Prescription Drug Affordability Board with the authority to review sudden price increases and set a maximum limit on what pharmaceutical manufacturers could charge patients for the drugs.

A handful of states, including neighboring Maryland, have established similar boards with the goal of regulating pharmaceuticals as a public utility. While oversight can be structured in a variety of ways, Petersen’s bill would have triggered price reviews for brand-name drugs that entered the market with a wholesale cost of $30,000 or more a year, or seen a wholesale price increase of $3,000 or more over a 12-month period.

“Dealing with the costs of a lot of drugs is pretty shocking, I can tell you,” Petersen said at a news conference on the legislation earlier this month. “And the increase in prescription drug costs has greatly outpaced inflation.” By monitoring prices, and capping seemingly unjustified cost increases, review boards aim to protect consumers from sometimes-massive hikes on essential medications such as insulin.

The legislation was broadly supported by advocacy groups including the recently formed Virginians for Affordable Medicine Coalition and Virginia chapter of the AARP. Pharmaceutical companies, though, were staunchly opposed, including Pfizer, which developed an advertising campaign against the bill.

Petersen described other powerful lobbying groups, including the Virginia Association of Health Plans and the Virginia Hospital and Healthcare Association, as “ambivalent” to the legislation — another barrier to its passage. And similar efforts have seen strong Republican opposition, including in Maryland, where Gov. Larry Hogan initially vetoed efforts to fund the state’s recently formed affordability board. 

As a result, Petersen said he’d need overwhelming Democratic support for the bill in the Senate, where the party holds a slim 21-19 majority. Tie votes are broken by Republican Lieutenant Gov. Winsome Sears.

“To get a bill like that passed, I’d need 100 percent Democratic support,” Petersen said after the vote. “And I just wasn’t there.” 

As a relatively new model, it’s still unclear how extensively affordability boards are able to control drug costs. The wholesale price of medications, set by manufacturers, are often used to set copays and out-of-pocket costs for consumers. But insurance companies also play a role in pricing by working through pharmacy benefit managers, or PBMs — intermediaries that negotiate costs with manufacturers. 

Many large insurers now own their own PBMs, and frequently receive rebates in exchange for placing certain medications on the list of drugs the companies are willing to cover. As a result, it can be difficult to determine how much consumers are actually paying. 

There’s also the risk that manufacturers could leave markets that opt for regulatory price-setting, or that insurers could remove capped drugs from their formularies, affecting consumer cost and treatment.

“The difficulty with all this is you end up mixing up health care economics with ethics and politics,” Dr. Harry Gewanter, an associate clinical professor of pediatrics at VCU, told the Mercury last summer.