Insurance and Real Estate Committee

HOUSE FAVORABLE REPORT

Bill No.:

SB-925

Title:

AN ACT CONCERNING THE COST OF PRESCRIPTION DRUGS AND VALUE-BASED INSURANCE DESIGN.

Vote Date:

3/15/2017

Vote Action:

House Favorable Substitute

PH Date:

3/7/2017

File No.:

SPONSORS OF BILL:

Insurance & Real Estate Committee

REASONS FOR BILL:

The bill intends to control the costs of prescription drugs by requiring drug manufacturers to disclose pricing information to the Insurance Commissioner, the use of value-based insurance design, and establishing a task force to study methods to control costs.

RESPONSE FROM ADMINISTRATION/AGENCY:

State of Connecticut Insurance Department, submitted testimony stating that the proposal is well-intended but may have unintentional consequences. It was noted that the term “value-based” is not well defined and the language addressing reduced cost-sharing is “circular and unclear.” The testimony stated that any reductions in cost-sharing must also meet federal non-discrimination rules and mental health parity requirements and some carriers may already offer wellness programs that could be considered to be a value-based design. There is a concern about the proposal as it relates to the provision of the ACA that guarantees the renewability of plans and how this legislation may affect an insurer's ability to do so, resulting in a major market disruption. Lastly, the task forced established by the legislation would require approximately $134,000 for the Department of Insurance to administer the study.

Kevin Lembo, State of Connecticut Comptroller, submitted testimony in support of the bill due to the “near crisis level” that the pharmaceutical market has reached. The rising costs of drugs touch every business, sector, and family in some way and the access to manufacturer data is essential to make informed policy decisions to curb the future costs and bring financial relief to those affected. The testimony outlined the five points of the legislative plan and their importance to addressing this issue.

Ted Doolittle, State of Connecticut Healthcare Advocate, submitted testimony highlighting the need for transparency regarding health care costs and the “elusive” nature of the costs associated with the wholesale and retail distribution of pharmaceuticals. The testimony noted the extent to which prescription drugs drive health care costs. The proposal is a step toward aligning the State's healthcare policies more closely with other “competition-driven consumer marketplaces.” It was noted that both costs and effectiveness of the drugs in question must be taken into account when developing any type of policy regarding drug pricing.

Senator Martin Looney, 11th District, submitted testimony in support of the bill because it addresses issues with patients' protections as it relates to prescription drug costs. The bill institutes needed transparency standards for drugs over a certain cost and for drugs with price increases over a certain percentage. It also recreates a much necessary task force on pricing of pharmaceuticals.

NATURE AND SOURCES OF SUPPORT:

Connecticut AARP

Jing Luo, MD, MPH, Harvard Medical School

Lisa Freeman, CT Center for Patient Safety

Tom Swan, CT Citizen Action Group

Universal Health Care Foundation of Connecticut

Connecticut State Medical Society

All the parties above submitted testimony citing the rising costs of prescription drugs and the need for controlling such costs. They are all supportive of the bill's initiative to require more transparency in the process of pricing prescription drugs.

Jason Madrak, Harvard Pilgrim HealthCare, submitted testimony stating that they are in support of Sections 5,6, and 7 of the bill regarding transparency but are opposed to Section 3 that requires health plans to calculate coinsurance and deductible payments based on the net cost of the drug. It is believed that the mandates in Section 3 are “unworkable” and would increase premiums.

NATURE AND SOURCES OF OPPOSITION:

PhRMA, submitted testimony stating that the bill will not help patients and could threaten access to needed prescription medications and the innovation of future treatments. The testimony noted the burden placed on the CID by the legislation, the misguided language of the bill and the fact that there are already protections in place that limit the impact of any price increase on a payor for the duration of a contract. The testimony stated that this legislation is not the way to ensure that consumers have access to needed medicines.

Patrick Plues, Vice President, Biotechnology Innovation Organization, submitted testimony stating that the bill would distort market dynamics for innovative biopharmaceutical medicines and limiting patient access to need therapies. It was noted that the prior notification requirements in the bill risk harming patients by disrupting availability of medications and undermining competition in the market. There are insufficient protections in place to keep confidential the proprietary information that could also reduce competition. The information being required is not provide useful guidance for patients or providers in choosing health plans in addition to placing an “undue burden” on small and pre-commercial biopharmaceutical companies.

Kristen Axelsen, Pfizer, submitted testimony stating that while Pfizer supports some of the concepts in the bill, they ask that be placed on hold until the Health Care Cabinet in Connecticut finishes its research on the matter. The testimony states that we should be encouraging “purpose-driven” models of information gathering that focus on enhancing collection and integration of claims and clinical data across all payers in the state that can then be used to identify the underlying drivers of health care costs in the State. It was noted that it is important to continue the development of models that incentivize the a shift from fee-for-service to value-based designs in all aspects of health care.

Brendan Bertsch, Boehringer Ingelheim, submitted testimony stating that the bill would impose requirements that would not result in the release of meaningful information for patients and would not reduce overall health care costs.

Connecticut Association of Health Plans, submitted testimony stating that they agree with the intent of the bill, however the substance of Sections 2, 3, and 4 of the proposal is not the way to go about achieving the goal of controlling drug costs.

Jennifer Herz, CBIA, submitted testimony stating that they are in favor of value-based design but are opposed to the mandates outlined in the bill. There is concern about the uncertainty of the federal health care and its impact on the cost of insurance in the State.

Reported by: Matt Hoey

Date: 3/29/17