In public opinion surveys, Coloradans have identified affordable prescription drugs as a top concern, giving encouragement to lawmakers and lobbyists who have developed legislation that would provide lower costs or retail discounts.
One newly revised bill promises to provide cheaper prescriptions to seniors and uninsured Coloradans. The plan, a pharmaceutical industry bill backed by organized labor, was integrated into House Bill 1252 and released late Thursday. It should be intensely scrutinized, because its benefits seem uncertain and its price tag even more so.
In 2005, the pharmaceutical industry was fifth on the Fortune 500 list of most profitable industries, with a 15.7 percent profit margin. A study unveiled Friday by the Center for Public Integrity said that the industry spent $44 million in 2003 and 2004 on lobbying campaigns to persuade state governments not to pass laws that would eat into industry profits.
The legislation creating Colorado Cares Rx is modeled after a 2005 Ohio law, which has had mixed results. Sen. Bob Hagedorn, a key proponent of controlling drug costs, was left out of the re-drafting process and is rightly skeptical as to whom the legislation would ultimately benefit. In both Ohio and Colorado, representatives of big drugmakers offered the plan only after more ambitious measures were drawn up that could have imposed discount guidelines on the drug industry and required its pricing to be more transparent. In California last year, the industry spent $80 million to defeat a plan that would have created a “preferred drug list” and allowed the state to penalize companies that promised but didn’t offer good deals. Hagedorn’s bulk buying discount plan, Senate Bill 1, has similar provisions and is strongly opposed by the pharmaceutical industry.
Under HB 1252, the state would negotiate discount drug prices at the same rates state employees pay. Eligible participants would pay fees of $3.50 per prescription. The plan might make sense for expensive drugs, but the fees could eat up the discount on other drugs.
The discounts would be voluntary offers by individual drug companies. Kurt Malmgren, senior vice president of the Pharmaceutical Research and Manufacturers of America, said the industry’s willingness stems from its fear of government-imposed price controls. It prefers to set its own prices, he said.
Eligible consumers in Ohio have realized average savings of about 30 percent, with 70 percent of the savings on generic drugs. The state spent $10 million in startup costs the first year.
If drug manufacturers delivered worthwhile rebates, HB 1252 could be invaluable for some Coloradans. But the draft bill says rebates would be voluntary. We urge lawmakers to ensure that any prescription drug legislation meets the objective of providing savings to those Coloradans who really need relief from high prescription costs.
