The Prescription Drug Price and Supply Chain Transparency Act of 2023 - Letter Of Support

The Center for Elder Law & Justice is pleased to sign on to the following letter of support, joining AARP New York and other organizations, encouraging New York State Legislators to support budget legislation proposed by Governor Kathy Hochul aimed at drug price transparency.

RE: The Prescription Drug Price and Supply Chain Transparency Act of 2023  

Honorable Andrea Stewart-Cousins                       Honorable Carl Heastie

Senate Majority Leader                                            Speaker of the Assembly

907 Legislative Office Building                                932 Legislative Office Building

Albany, NY 12247                                                      Albany, NY 12248

Dear Majority Leader Stewart-Cousins and Speaker Heastie:

Thank you for your past leadership in standing up for millions of New Yorkers and working to make prescription drugs more accessible and affordable.

We write to urge you to continue that leadership by supporting Part Y Subpart B Article 30 Section 3003, 3004, and 3005 of the Health and Mental Hygiene Article VII budget legislation proposed by the Governor to increase prescription drug price transparency.

List prices on more than 1,200 prescription drugs rose by an astounding 31.6% on average - far higher than the general rate of inflation - between July 2021 and July 2022, according to a new report from the U.S. Department of Health and Human Services (HHS). In addition a recent AARP national survey of registered voters 50 and older found cost is the primary reason for deciding not to fill a prescription.

The Governor’s proposal represents one of the most comprehensive prescription drug transparency initiatives in the nation as it combines far-reaching drug price increase reporting requirements with mandatory disclosure of “pay for delay” agreements, which keep consumers from accessing cheaper generic versions of drugs for 17 months on average, according to the U.S. Federal Trade Commission (FTC).

Manufacturers would be required to report their planned price increases to the Department of Financial Services (DFS) well in advance to help consumers prepare for any potential rise in drug costs at the pharmacy counter and to arm them with the information they need to choose the best health plan for their particular needs. The leading cause of the rise in health care premium costs is the increase in prescription drug prices. Under the Governor’s proposal, New York would be empowered to investigate manufacturers’ assertions as to reasons for increases, building upon the authority you granted to DFS in 2020 to investigate price spikes.

Already, 19 states have enacted over 26 drug transparency laws. Vermont, the first such state to do so, reported an almost 80% decline in the number of drugs with price increases of at least 15% in its Medicaid program between 2016 and 2020. Oregon’s transparency law resulted in 70% fewer reports of price increases over their threshold of 10% or higher for drugs priced at $100 or more between 2019, the program’s first year, and 2020.

The second piece in the Governor’s proposal would require reporting of “pay-for-delay” agreements between brand name drug manufacturers and generic manufacturers. A pay-for-delay agreement is an arrangement between a brand name drug manufacturer and a competing generic drug manufacturer by which the generic drug manufacturer agrees to delay the release of a generic equivalent drug in exchange for something of value from the brand name drug manufacturer.

These pay-for-delay agreements provide financial benefits to drug manufacturers at the expense of consumers: the brand-name manufacturer can continue to charge monopoly prices, and the generic company is compensated for its inaction.

An FTC report has estimated that pay-for-delay agreements cost American consumers $3.5 billion per year by prohibiting generic entry for an average of nearly 17 months than without such agreements, as previously noted. In the meantime, consumers must continue paying brand-name drug prices, which can be as much as 85% higher than the prices of their generic drug counterparts. A 2021 Columbia Science and Technology Law review article found the cost to Americans could be as high $37 billion a year.

Our organizations strongly believe The Prescription Drug Price and Supply Chain Transparency Act of 2023 would shine a light on the ever-increasing prices of prescriptions drugs, which impact both consumers filling their prescriptions and paying insurance premiums, as well as all New York taxpayers, who underwrite New York State’s $9 billion pharmacy budget. This transparency would not only provide important information about prescription drug prices but could change behavior to the benefit of all New Yorkers. For the above reasons, we the undersigned respectively request that you accept the Governor’s Rx price transparency language and include it in the final 2023-24 state budget.