S.599/A.1707 – Early Warning of Rx Increases

The New York Health Plan Association (HPA) supports S.599/A.1707, which requires drug manufacturers to provide at least 60 days’ notice of their intention to raise the cost of a drug more than ten percent to the Superintendent of the Department of Financial Services.   This notice should require the manufacturer to disclose simple and easy producible information, such as the date of the increase, current wholesale acquisition cost of the prescription drug, the dollar amount of the future increase in the wholesale acquisition cost of the prescription drug, and an explanation on the need for the increase.  Under this legislation, the Superintendent of the Department of Financial Services could levy civil penalties to drug companies that fail to comply.  While the 2020-2021 enacted budget included a requirement for the Department of Financial Services to create a Drug Accountability Board and gave the superintendent the ability to elect to investigate when prescription drug costs increases over 50% in a calendar year, the budget language did not address prior notification for impending price increases.  We believe this legislation is necessary to allow consumers and employers to prepare for price increases and arms the Department of Financial Services with the tools necessary for enforcement.

Prescription drug prices have skyrocketed in recent years.  According to 3 Axis Advisors, drug makers plan to raise prices on more than 350 unique drugs in early January 2023, including therapies for lung cancer, lupus, shingles, and rheumatoid arthritis.

Source: 46Brooklyn

In 2022, drug companies and increased prices on more than 1,400 drugs; the most increases since 2015.[1] In January alone, they raised prices on more than 800 brand name drugs by an average of 5% on a broad range of diseases including treatments for cancer, multiple sclerosis, nerve pain, hypertension, and attention deficit hyperactivity disorder, with several increasing their prices by double-digits[2].  Among them:

Source: GoodRx.com

Often, these price hikes have no correlation to clinical benefit to patients.  In December, the Institute for Clinical and Economic Review (ICER) released data showing that seven out of ten high cost drugs had substantial price increases in 2021 that were not supported by new clinical evidence.[3]  These increases accounted for $805 million in new costs to patients in 2021 alone.

In order to control costs and adequately plan for health care expenses, consumers and employers need as much notice as possible about impending drug cost increases.  By requiring manufacturers to provide notice of a price increase of more than ten percent, this bill begins to arm consumers with the tools they need to plan for expected increases or work with their providers to change medications when applicable to control costs.  This legislation represents part of a larger effort to begin to gain insight into the rise of prescription drug costs and steps policy makers, health plans, and consumers can take together to control costs.  For these reasons, HPA supports S.599/A.1707.

[1] https://www.msn.com/en-us/money/markets/exclusive-drugmakers-to-raise-prices-on-at-least-350-drugs-in-u-s-in-january/ar-AA15Pbzb?OCID=ansmsnnews11

[2] https://www.goodrx.com/healthcare-access/drug-cost-and-savings/january-drug-price-hikes-2022

[3] https://icer.org/news-insights/press-releases/icer-identifies-most-significant-2021-us-drug-price-hikes-unsupported-by-new-clinical-evidence/