US laws to force drug pricing transparency 'unlikely' to work

State lawmakers in the US have proposed numerous bills to clamp down on rising drug prices that they view as a matter of accountability for the pharmaceutical industry. These bills will require drug companies to justify their pricing, providing evidence of any recent increases for certain medicines. Legislators hope this attempt at transparency will force drug companies to revisit their pricing strategies and in some cases, change them. This may be a forlorn hope as they have to balance competing demands for cheaper medicines from their constituents against the demands of the market. Drug companies argued that they are paying higher rebates for negotiated coverage of their products with health insurers. Furthermore, the cost of these rebates is rising compared to their sales hence the reason for the price hike.

In June, Vermont Governor Peter Shumlin signed a bill that would force drugmakers to be more transparent about price hikes.

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From coast to coast, state lawmakers are pushing legislation in hopes of putting a lid on rising drug prices. More than a dozen bills have been proposed that require companies to either fork over information about their costs or explain recent price hikes for some medicines.

The idea is based on a simple premise – by forcing the pharmaceutical industry to provide this sort of data, the curtain will be peeled back on the decisions used to justify pricing. In turn, drug makers would presumably respond to the scrutiny by changing their practices.

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“This bill is about accountability,” Vermont Governor Peter Shumlin declared this past June, when he signed legislation that demands companies account for certain price hikes. In doing so, he gave Vermont the distinction of becoming the first state to pass such a law.