Testimony Archive

My name is Deirdre Cummings and I am the consumer program director with the Massachusetts Public Interest Research Group. MASSPIRG is a non-profit, non-partisan consumer advocacy organization with over 50,000 members across the state. We are here today to testify in support of measures to lower prescription drug prices and better protect consumers from drug errors made by their pharmacies. The bills include SB 394, SB 411, SB 412, SB 432.

Lower Prescription Drug Costs

We all know prescription drug prices are high and getting higher all the time. In 2005, U.S. consumers spent $251.8 billion on prescription drugs, nearly $50 billion more than we paid in 2003. A 2004 report by Families USA showed drug costs increased at two or more times the rate of inflation from January 2003 and to January 2004 while the pharmaceutical industry continues to be the most profitable industry in the United States. Worse, uninsured consumers pay up to 6 times more for prescription drugs purchased from American pharmacies than they would pay for the same prescriptions at a Canadian pharmacy. While pharmaceutical companies are making record profits, Americans are struggling to pay for needed medical treatment and the cost of health care to employers and the government is soaring.

We know, too, that Americans pay much more for prescription drugs than citizens of other countries. That’s why so many seniors are buying their drugs from Canada.

We also know that some Americans pay more than others. For example, if you’re a veteran, you can get your prescription drugs for about one-half of what the typical uninsured resident in Massachusetts has to pay.

Massachusetts is not exempt from these cost increases. Current estimates put the Commonwealth’s spending at $1.2 billion per year on prescription drugs. The results of these growing prescription drug costs are more people without access to necessary drugs, higher premiums for those fortunate enough to have prescription drug coverage, and an increasing burden on the state and other programs to assist those who cannot pay for drugs themselves.

According to a report we released in July 2006, “ Paying the Price”, consumers without prescription drug coverage are being charged much higher prices for prescription drugs than the “best available prices”. The “best available prices” were those drug prices the federal government negotiates for some of its programs like the Veterans Affairs Administration, commonly know as the Federal Supply Schedule (FSS) or from a retailer in Canada.

In the spring of 2006, MASSPIRG teamed up with state PIRGs across the country to survey over 600 pharmacies in 35 cities to determine how much uninsured consumers pay for 10 drugs when compared with prices paid by the federal government, which uses its buying power to negotiate with drug companies for lower prices. While many studies have focused on the impact of high drug prices on senior citizens, this survey examined the prices uninsured consumers pay for a range of prescription drugs widely used by Americans under age 65, such as antibiotics, allergy medication, anti-depressants, and cholesterol-lowering medication.

The report, Paying the Price, The High Cost of Prescription Drugs for Uninsured Americans, included a review of prices in the Greenfield/Springfield area, where uninsured residents pay 63% more than the federal government for the same prescription drugs, in addition to prices in the Boston area.

Among the survey’s key findings:

• In Boston, uninsured consumers pay 73% more than what the federal government pays for the same drugs, ranking the city first out of the 35 cities we surveyed.
  
• In Springfield/Greenfield area, uninsured consumers pay 63% more than what the federal government pays for the same drugs, ranking the area 9th out of the 35 cities we surveyed, more than New York and Chicago.
  
• The uninsured in Boston and Springfield/Greenfield pay more than twice as much for their medication at local drug stores as they would pay at a Canadian pharmacy. The hormone replacement drug Premarin costs 594% more at Boston drug stores than it does at a Canadian drug store.
  
• In 2004, MASSPIRG released a similar study of prescription drug prices. Looking at the nine drugs we surveyed both in 2004 and 2006, the average price paid by uninsured consumers in Boston increased by 14%, faster than the general rate of inflation over the two-year period.
  
• Nationally, based on the 35 cities we surveyed, uninsured Americans pay 60 % more on average than what the federal government pays for same drugs and twice as much as they would pay at a Canadian pharmacy.

Much of the debate about increasing much needed prescription drug coverage misses the main problem – pharmaceutical companies are charging the state and consumers too much for prescription drugs. We must get lower prices from drug companies, not pay them even more.

 

The Prescription Drug Fair Pricing program SB 411

Although the prescription drug crisis is complex, policy options do exist and could be implemented. SB 411 will lower the cost of prescription drugs through the following mechanisms.

Creates A Prescription Drug Buying Pool

A prescription drug-buying pool allows businesses, the state government and individuals to use their combined buying power to negotiate lower drug prices, similar to what is done by the federal government and big health insurance providers.

Buying pools have passed in previous sessions but have failed to be implemented. In February of this year, MASSPIRG joined 37 lawmakers, including some from this committee, and other consumer/senior organizations in calling on the Patrick Administration to implement the bulk purchasing programs that were on the books.

In 1999, the legislature passed Section 271 of Chapter 127 of the Acts of 1999 that required the administration to create a plan to pool state purchases for prescription drugs and include uninsured individuals in this purchasing pool to take advantage of discounts available to bulk purchasers.

In the 2000-2001 session, the legislature passed Section 62 of Chapter 177 of the Acts of 2001. This law included language requiring drugs purchased by the state to be purchased in bulk in accordance with Section 271. Section 62 directed state agencies to bid on prescription drugs as an aggregated unit.

The buying pool in this bill would:

• Give the state government the ability to negotiate substantial rebates from drug companies and discounts from retailers, saving participants money.

• Provide tools to help persuade drug companies to negotiate prices in good faith, including public disclosure of uncooperative companies.

This pool would use a uniform preferred drug list (PDL) (see below) to move market share, negotiate rebates from pharmaceutical companies, and reduce administrative hassles for providers and patients. These groups include:

• Medicare-eligible individuals above 188% of the federal poverty level without insurance that covers prescription drugs.
  
• Any individual below 300% of the poverty level without insurance that covers prescription drugs, by creating the Healthy Massachusetts Discount Card Program based on Maine’s successful “Healthy Maine Prescription Program” which will provide negotiated lower prices through a discount card to residents without coverage or with inadequate prescription coverage.
  
• State Agencies including: Div of Medical Assistance, EOEA, Group Insurance Commission (GIC), Div of Employment Training, DPH, DMH, DMR and Dept of Corrections.
  
• Any private or public health plan or state that wishes to opt-in.

The bill also provides consumer protections like no longer than a 10-minute wait for emergency prior authorization drug requests. The bill also bans pharmaceutical company marketing gifts and paves the way for our participation in multi-state efforts to reduce the cost of prescription drugs.

Expand Use of Preferred Lists

Panels of experts develop Preferred Drug Lists (PDL) by evaluating similar medications and placing the cheaper, but equally effective, medications at the top of the list. Health care providers and state governments use these PDLs when making purchasing decisions, ensuring that patients get the most cost-effective drugs available while encouraging drug manufacturers to offer competitive prices.

Increase the Transparency of PBMs

Pharmacy Benefit Managers (PBMs) , the pharmaceutical “middlemen”, manage the prescription drug care for millions of Americans. PBMs negotiate deals from pharmaceutical companies on behalf of insurers, state health programs, and large businesses. These deals, however, are shrouded in secrecy and are the basis for misconduct. We must increase transparency and accountability for PBMs.

This bill requires the use of a nonprofit Pharmacy Benefits Manager (PBM) that discloses its revenue sources.

Ban Pharmaceutical Marketing Gifts

This bill prohibits gifts from pharmaceutical industry representatives to physicians who are licensed in Massachusetts. Specifically it would;

• Prohibits all gifts, including travel, lodging, meals, and entertainment.
• Excludes drug samples exclusively for use by a physician’s patients.

We have made some steps forward in providing prescription drug price relief for some consumers in the state and we ought to and need to do more. The high cost of prescription drugs effects us all – through higher health care premiums and co payments, restrictive formularies, higher taxes both state and federal as we provide drug relief for the poor, and in our own lives as many of us or ones we care about can not afford their needed medication and risk jeopardizing their health or financial well being in order to pay for the drugs.

SB 394 To Promote Drug Affordability

The Prescription Drug Affordability Act SB 394 creates a website that will provide information to consumers on safely purchasing affordable prescription drugs from licensed Canadian Pharmacies.

The bill also establishes an Office of Pharmaceutical Information within the Department of Public Health to oversee the dissemination of information to consumers. The bill directs the Governor to seek permission from the federal Department of Health and Human Services to establish the Website.

When creating the website, the state will:

• Establish relationships only with licensed Canadian pharmacies and maintain a registry of those pharmacies.
• Provide information on drugs that have only been approved by Canada’s federal drug approval agencies.
• Only provide information to consumers who have a valid prescription for personal use.
• Keep records of any safety concerns registered with the office.

This bill critically important as just two weeks ago the US Senate added a poison pill to Senator Dorgan and Snowe’s RX dug importation amendment. The poison pill amendment says that the Secretary of Health and Human Services must certify that the drugs are safe before they can enter the U.S.  Well, the Secretary can’t certify the drugs you purchase at CVS are safe.  So no drugs can be imported.  Massachusetts must keep pushing and ask for the waiver and establish a web site.

I have enclosed a copy of our report on prescription drug prices with my testimony for your files. I hope you will pass these bills favorably from your committee.