State-Level Drug Price Transparency Laws Miss the Mark, Say Researchers

In recent years, a number of US states have put forward legislation that aim to increase drug cost transparency, including a Nevada law that requires drug makers to report their costs to manufacture and market diabetes treatments and a Connecticut law that requires the state to list the top 10 drugs that represent substantial state spending.

While policy makers have hailed these legislative solutions as steps toward bringing down the high cost of drugs for US patients, questions remain as to how effective these laws are at achieving their aims. Now, in a research letter published in JAMA Network Open, researchers say that these laws are largely ineffective at revealing true transaction prices for drugs.

In the research letter, Martha S. Ryan and Neeraj Sood, PhD, both of the University of Southern California, analyzed state drug price transparency laws to assess whether they improve transparency across the supply chain. Ryan and Sood used the National Conference of State Legislatures’ prescription drug database to identify relevant laws that were enacted between 2015 and 2018, and evaluated whether these laws would reveal information that was previously unavailable, particularly with respect to real transaction prices, including rebates and concessions.

Among the 166 drug pricing laws that the authors identified, 35 laws in 22 states included transparency provisions, but only 7 of these laws, passed in 6 states, resulted in new disclosure of information on real transaction prices. Namely, laws in Connecticut, Louisiana, and Nevada require that pharmacy benefit managers report rebates in aggregate (but not for individual drugs). Vermont requires that net prices be reported by insurers, and Maine requires that manufactures provide net prices. Laws in Oregon and Nevada require that drug makers report their profits.

No states have passed laws that address more than 3 supply chain segments, write the authors, and no state has passed a law that reveals true transaction prices or profits across the supply chain.

“To ensure drug price legislation is useful,” the authors say, “policy makers should require that real price information, including discounts and rebates, is reported by all supply chain participants.” They add that this information would ideally be available for the products that have the biggest impact on state budgets, or that have shown large price increases.

“If requiring such disclosure at the individual-drug level would invite legal challenge, states should at least require each supply chain segment to report aggregate profits from sales in that state,” they add.

Reference

Ryan MS, Sood N. Analysis of state-level drug pricing transparency laws in the United States. JAMA Netw Open. 2019;2(9):e1912104. doi:10.1001/jamanetworkopen.2019.12104.