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TO: Chairman Welch, Chairman Sanchez and members of the Joint Committee on Health Care Finance

FR: Deirdre Cummings, Legislative Director, MASSPIRG

DT: April 11, 2016 

Testimony in favor of SB 1048, An Act to Promote Transparency and Cost Control of Pharmaceutical Drug Prices

My name is Deirdre Cummings and I am the legislative director for MASSPIRG, a non-partisan, non-profit, member supported consumer advocacy organization. We are here today to testify in favor of SB 1048, An Act to Promote Transparency and Cost Control of Pharmaceutical Drug Prices, which will reduce the skyrocketing costs of prescription drugs and our high cost of healthcare.

Prescription drug prices are rising rapidly and spending on prescriptions has been one of the fastest-growing components of health care spending in the past decade. In 2013, the last year for which the AARP prescription watchdog analyzed data, average brand name drug prices grew 12.9 percent, outpacing the average rate of inflation by over eight times. The Center for Medicare and Medicaid services (CMS) estimates that drug costs will rise from $272 billion in 2013 to $406 billion by the end of this decade. For specialty drugs used to treat conditions such as hepatitis C and multiple sclerosis, the PBM Express Scripts predicts spending will rise 20 percent per year -- more than four times the percentage rise in the cost of health care overall.  If we want to keep health care costs in check, it is clear that we must address the exorbitant pricing of prescription drugs.

Further – US drug prices are significantly higher than prices for the same drug in every other country. The International Federation of Health Plans (IFHP) estimates that drug prices in the US are up to 10 times higher than in most other developed countries. Below is an example of price difference by country for some popular medications, 2013 Comparative Price Report

                  

Transparency can curb run-away RX drug pricing

Prescription drugs can offer some transformative, curative and lifesaving treatments results. The hope would be those advances can not only improve our health but over time can reduce our overall health care costs as long term care for chronic illnesses will be become less necessary.

However, like other health care expenses, we all have an interest in keeping costs as low as they can be and to eliminate any unfair or unreasonable profiteering.  The prescription drug industry as a whole is one of the most profitable in the country, fueled in part by publicly financed   research and development, aggressive marketing tactics by industry, and massive purchasing by state and federal governments for VA, Medicare and Medicaid programs.

This bill calls for drug manufacturers to publicly report information about the costs underlying their drugs. Manufacturers would have to report their costs to manufacture the drug, the amount they spent on research (and how much of that came from government grants), how much is spent on advertising for the drug (including amounts for ads aimed at consumers), the price charged in other countries (usually much, much less than the US price), and the true price of the drug in Massachusetts, which is now often shrouded by complicated discounts and rebates that are kept secret, even from the insurance companies that pay for the drug.

SB 1048, An Act to Promote Transparency and Cost Control of Pharmaceutical Drug Prices will allow us to look under the hood to fully diagnose the problem of skyrocketing drug prices. I hope you will pass the bill quickly from your committee.

                

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