Transparency in drug pricing: a strategy to reduce drug costs?
A report on healthcare costs and bipartisan state-level approaches by the Millbank Memorial Fund stated that health care costs are a “pressing policy issue.” The report suggests that “shared understanding” is an essential step in addressing this issue.
The costs of prescription drugs are, of course, a part of the discussion (see Table 1 below) and prompted a request from the Pennsylvania legislature’s Insurance Committee to The Council of State Governments East for information about state policies on drug price transparency legislation.
At a public session in March, Shirley Girouard, PhD, Council of State Governments East health policy consultant, provided information about the issue and various state initiatives related to drug pricing transparency.
Table 1
Research suggests many states have passed laws designed to incentivize manufacturers to lower costs by reporting increases and pricing mechanisms. States enacted 166 drug pricing bills between 2015 and 2018. Of the 166 laws, those in 22 states included a price transparency component. There was no evidence that drug price transparency laws reduced health care costs because:
- Drug pricing mechanisms are complex (see Figure 1, below)
- Information obtained is not compete or specific
- Policies are difficult to implement
- There are no consequences associated with policy compliance
Figure 1: Drug Pricing Complexity (Snood et al, 2017)
Lowering pharmaceutical costs is a shared interest of policymakers on all sides. Attention given to this issue in recent presidential campaigns and the fact that policy stakeholders regularly hear from their constituents about the high costs of this component of healthcare suggests that this will remain an issue for state policymakers.
