Vermont signs bill on fines for drug price hiking

Vermont Governor Peter Shumlin has signed a bill into law which introduces the threat of $10,000 penalties for companies that quickly increase the wholesale acquisition costs of the state’s most-used drugs without disclosing the reasons behind such hikes. The bill seeks to provide redress for price hikes by pharmaceutical companies, such as Turing Pharmaceuticals, which have raised prices disproportionately. 13 other states are drafting similar bills, including New York, California, Ohio, Massachusetts and Virginia.

The new legislation will identify up to 15 regularly used medicines each year that the state spends a significant amount of healthcare dollars on. Of these, any drug that has increased in cost by 50% or more over the past five years can be considered for a fine, as well as any drug that has increased by more than 15% in the previous 12 months. Where these price hikes are found, the drug manufacturer will be required to provide justification to the Office of the Attorney General.

If no reasonable explanation is forthcoming then an action may be brought for injunctive relief, costs, and legal fees of up to $10,000 per violation. Each failure to provide information when requested constitutes a separate violation.

In terms of the process behind this, the Attorney General and Department of Vermont Health Access will look to provide the General Assembly a report by December 1st of each year which discloses information shared from pharma companies. However, the names of the companies or medications themselves will not be included.

According to the law, any information given to the Office of the Attorney General as a result of this legislation is exempt from public inspection under the Public Records Act. Therefore it won’t be released due to financial, competitive, or proprietary concerns about the information.

One industry pressure group, PhRMA, has spoken out against the bill, saying any threat of revealing pricing was a disincentive against deeper discounts and rebates. Other aspects of the law also address drug formularies, fees related to dispensing and a pilot project on out-of-pocket costs.

 

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